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Economic Freedom: Rankings, Importance and Factors

Updated on February 22, 2015

Economic Freedom

Source
Economic Freedom ranking 2013
Economic Freedom ranking 2013 | Source

Introduction

Freedom has contributed so much to many societies in the world today though some misinterpreted it. These contributions are either negatively or positively. Many things have been written on ‘freedom’. People have been put into the state of agony due to this word: many imprisoned; countries face wars; many made homeless; widowed and others assassinated. In the other hand, many have enjoyed and wear new faces in the name of freedom: independence attained; good education; some sheltered and feed well. A voice shouted “unbind him and let him go”! But, which kind or aspect of freedom are we talking about in the context?


Economic freedom is the system of the economy where individuals are permitted to choose how to run their individual businesses with their own resources and little or no governmental interference. Here, an individual initiates his own business. I mean he is the master of his own. He takes care of his business activities with the available ‘materials’ he has at hand and treats his customers well. The government role in this system is to protect the lives and properties of her citizens. Free enterprise is the economic system based on the voluntary exchange of goods and services, in which the people determine their own economic affairs, by deciding where they work, or invest, how to spend or save the fruits of their labour, and with whom they trade.


In this piece, some countries economic freedoms are discussed. Research shows that countries that are at the top (countries that are more economically free) of the ranking live better than those that practice little or less free economy. The capita per income in the countries that practice free economy are more.


Free market system has impacted positively in many nations of the world. The benefits from practicing economic freedom are numerous. All of them cannot be discuss in this piece because they are like water in the ocean. Many have their lives transformed from zero to hero due to the opportunity offered by this economy system. The names of some nations echo round the world as a result of this system.


There are some factors that promote economic freedom. These factors are like gears in automobiles. They cement the expansion of free market system.



2013 Economic Freedom Ranking of Nations and Position

Country
Position
Percentage of Economic Freedom
Hong Kong
First
89.3
Singapore
Second
88.0
Australia
Third
82.6
New Zealand
Fourth
81.4
Switzerland
Fifth
81.0
Canada
Sixth
79.4
Chile
Seventh
79.0
Mauritus
Eighth
76.9
Denmark
Ninth
76.1
United States
Tenth
76.0
The table shows top ten countries which are economically free in 2013 with United States of America occupying tenth position.

The Economic Freedom Rankings of Some Nations

  • Hong Kong: According to 2013 Index of Economic Freedom, Hong Kong is ranked at the top most position. This country stands out among others with the overall score of 89. 3%. In academics, I call this score “unique outstanding score”. This score is a very high; indeed this country deserves it because of the level of their achievements in all angles. Hong Kong is grouped in the category named “Free” (2013 Index of Economic Freedom). This category consists of nations that score between 80-100%. The Government Spending, Business Freedom, Monetary Freedom, Financial Freedom, Fiscal Freedom, Labour Freedom, Freedom from Corruption, Property Right and Investment Freedom of Hong Kong are 88.9, 98.9, 82.1, 90.0, 92.9, 86.2, 84.0, 90.0, and 90.0% respectively in 2013 (Index of Economic Freedom). In fact, these data is good and that is what makes Hong Kong to occupy first position in the list of nations that engage in economic freedom.
  • United States of America: This country is ranked 10th in the list of the 2013 economic Free nations with the overall score of 76.0%. President Barack Obama is working hard to see that things are put right in this country. USA is called World Power not just because people cherish the country but it is based on the development and the way things are carried out in the country. I am not surprised on how everybody wants to go to this part of the world’s continent. The country finds itself in the category named “Mostly Free” in the 2013 Index of Economic Freedom. The percentage ranking of this category is from 79.9 to 70.0. The countries in this category range from 6th to 34th in position. Those that fall within this group are the likes of Canada, Chile, United Kingdom, Austria, Japan, Denmark, South Korea, Norway and others. Botswana and Mauritius are the only African countries in this group. United States of America is most outstanding in their Business Freedom. This is one of the reasons why they make much progress; successful businessmen and women contribute much through the taxes they pay. The Government Spending, Business Freedom, Monetary Freedom, Financial Freedom, Fiscal Freedom, Labour Freedom, Freedom from Corruption, Property Right and Investment Freedom of United States of America in 2013 are 47.8, 90.5, 75.0, 70.0, 69.3, 95.5, 71.0, 85.0 and 70.0 respectively (Index of Economic Freedom).
  • Nigeria: This is a country located in the West African region of the Africa continent. Nigeria occupies the position of 120 in the 2013 economic freedom of nations ranking. The overall score of the country is 55.1%. It finds itself in the category titled “Mostly Unfree”. This position is discouraging in all angles. Nigeria did not perform well at all; she is still at the dormant stage. This country does not even make the list of top ten in the African continent. The low tolerance of economic freedom makes them to perform low in different sectors. The education, security, employment, technological and power supply sectors of the country are in a mess. These challenges piss many citizens of the country off. The Government spending, Business Freedom, Monetary Freedom, Financial Freedom, Fiscal Freedom, Labour Freedom, Freedom from Corruption, Property Right and Investment Freedom of Nigeria is 74.6, 55.7, 73.3, 40.0, 82.6, 67.2, 24.0, 30.0 and 40.0% respectively (Economic Freedom Index, 2013).

I will like to write more on the corruption issue in this my fatherland, Nigeria. What do you think about this country in terms of their corruption ranking? Is this country moving forward or backward? The result reveals that only 24.0 per cent of the activities going on in this country are free from corruption. In the other words, 76.0% of the activities going on in this country are corrupt. Corruption has eaten very deep into the fabrics of Nigeria. Corruption takes many forms in Nigeria today. This bad engagement is found within the government as well as among the citizens of the country. Despite a marginal improvement over last year’s survey, Nigeria remained at the bottom of the heap on the global corruption index, having been ranked the 35th most corrupt country in the world by Transparency International (TI) in 2012 (from Thisday live news on December, 2012) and 8th in 2013. We really need to put in much effort to fight this dent in the image of our country. All hands must be on desk to achieve corruption free society in Nigeria.

Note: The top ten countries which are economically free in 2013 are: Hong Kong (1st) with total score of 89.3%; Singapore (2nd) with total score of 88.0%; Australia (3rd) with the score of 82.6%; New Zealand (4th) with the score of 81.4%; Switzerland (5th) with the score of 81.0%; Canada (6th) with the total score of 79.4%; Chile (7th) with total score of 79.0%; Mauritius (8th) with total score of 76.9%; Denmark (9th) with total score of 76.1%; and USA (10th) with total score of 76.0% .

2013 Top Ten Countries that are Economically Free in Africa

Country
Position
Percentage of Economic Freedom
Mauritius
First
76.9
Botswana
Second
70.6
Rwanda
Third
64.1
Cape Verde
Fourth
63.7
Madagascar
Fifth
62.0
South Africa
Sixth
61.8
Ghana
Seventh
61.3
Uganda
Eighth
61.1
Namibia
Ninth
60.3
Burkina Faso
Tenth
59.9
The above table is on the 2013 economic freedom ranking of Africa continent with Mauritius occupying the top position.

2013 Top Seven from Europe

Country
Position
Economic Freedom Percentage Rank
Switzerland
First
81.0
Denmark
Second
76.1
Ireland
Third
75.7
Estonia
Fourth
75.3
United Kingdom
Fifth
74.8
Luxembourg
Sixth
74.2
Finland
Seventh
74.0
Table showing Top Seven nations from European region that practice economic freedom in 2013 with Switzerland on the top.

2013 Top Three Nations that are economically Free in North American Region

Country
Position
Economic Percentage Rank
Canada
First
79.4
United States of America
Second
76.0
Mexico
Third
67.0
The table displays top three countries that perform well in the 2013 economic freedom ranking from North America.

Top Countries from Asia-Pacific Region

Country
Position
Economic Freedom Percentage
Hong Kong
1st
89.3
Singapore
2nd
88.0
Australia
3rd
82.6
New Zealand
4th
81.4
Taiwan
5th
72.7
Japan
6th
71.8
Macau
7th
71.7
South Korea
8th
70.3
Malaysia
9th
66.1
Thailand
10th
64.1

Top Countries from South American Region

Country
Position
Percentage of Economic Freedom
Chile
1st
79.0
Saint Lucia
2nd
70.4
The Bahamas
3rd
70.1
Uruguay
4th
69.7
Colombia
5th
69.6
Barbados
6th
69.3
Peru
7th
68.2
Costa Rica
8th
67.0
Jamaica
9th
66.8
El Salvador
10th
66.7

Note: Brazil belongs to the above continent but where are they in the top ten? This country has produced many football stars like David Luiz of Chelsea FC; Marcelo of Real Madrid FC; Lucas of Paris Saint-German FC; Neymar of Barcelona FC; Oscar of Chelsea FC and others. Notwithstanding these achievements, Brazil was ranked 100th in the in the world in the 2013 Economic Freedom Index of Nations.


Economic Freedom: Bedrock to many Successes Achieved in many Nations of the World (Importance)

Economic freedom promoted by many nations of the world has made them outstanding. United States of America is one of the countries that preach and practice this “good news’’. Can you compare the economy of this country with that of those who do not practice this system, maybe, the Soviet Russia? Below are indications or benefits of economic freedom:

1. Economic freedom eradicates poverty: Nations which are economically free have less percentage of the malady called poverty. Poverty is the state of being poor. The phrase “the rich get richer and the poor get poorer’’ applies, not to free markets, but to mercantilism and political cronyism, that is, to systems in which proximity to power determines wealth. In free market, poor people can start-up a business with the small available capital. The thing that matters is the people’s seriousness and their attitudes toward their consumers. In later years, he will become rich as well. Sonya Carson, the mother of Dr. Ben. Carson, came from a poor family. Later, she became rich and trained Ben Carson in the tertiary Institution. Today, who do not know her renowned son all over the world?

2. Employment creation: Employment is attainable through economic freedom. People can easily be self-employed in the nations that highly practise free economy. Some unemployment is caused not by inflation, but by taxes and regulations on work which cause a mismatch between the Supply of labour and consumer demand. Since these taxes are reduced in free market, there exists the hunger of people to start-up something. People create jobs for themselves instead of waiting for the government to do that for them. Through this means they create employment for others who are jobless. As the citizens business expand day-by-day, more jobs are being created for the jobless.

3. Technological Growth: In nations that seriously practice free economy, there is always advancement in the technology. The citizens can make use of the resources at their reach to manufacture new things without any hindrance from the government. To cement this point, when the consumers buy more of the already produced machines or invention, the inventors are strengthened to produce more. This makes the technological standards of these nations grow the more. Because the income they generate is theirs alone, they are energized to earn more. What belongs to you, you tend to take care of; what belongs to no one or everyone tends to fall into disrepair.

4. High life expectancy: People live longer in a good capitalist society. You may ask “what concerns free market system and long lives?’’. People choose the kind of work that suits them. There is no room for the government to force you to do that particular work which you do not want to do. The business owner can chose to go to hospital regularly without governments restrictions. This is because the enterprise is his and nobody has the right to interrogate him for not coming to work. When they choose that which they cherish and good to them, they last longer. According to the Health and Social Statistics, the average life expectancy for Soviet Russia was 66 while that of United States was 78.1 years in 2009. In the 2013 Index of Economic Freedom, Unite States of America is recorded 10th freest in the world while Russia is ranked 139th freest in the world. So, with this comparison, it is clear that economic freedom encourages long lives.

5. It encourages competition: Also, competition is a popular word in free market nations. Through these competitions, prices of goods and rendering of services are reduced. Initially, new products like Video Cassette Recorders, microwave ovens or cellular telephones are expensive and only accessible to the rich, but as products are tried, tested and modified, and as more capital is invested in their development, the price falls. In Hong Kong, the telecommunication companies are into concrete competition. They issue bonus to their customers as if there is no tomorrow. This is another good side of free market system.

6. It limits Corruption: Globalization as related to free market fights corruptions. In free market societies, individuals have television channels, radio stations and newspaper companies of their own. They deliver “concentrated’’ information to the citizens about the dirty games played by the government. These channels tell the government the truth and not what they want to hear. When they (the government) see that their “ass’’ is exposed; they are compelled to make amend. While all Chinese newspapers, radio and television stations are owned by the state, the internet has proven difficult for the authorities to control.

7. Economic freedom encourages agriculture: Capitalism plays important role in promoting agricultural practices. The machines produced by the technologists are being bought and sold to the farmers. These machines increase the agricultural output because less manpower is used and mechanical power at the apex. This will make the nations to produce more foods for the masses. This means encourage the citizens to engage in agriculture as the source of their earnings thereby having larger output.

8. Supports banking sector: The banking sector of nations who are economically free is revived. When the citizens end every transaction of the day, they do not swallow their cash into their stomachs. They deposit them into their bank accounts. The banks trade with them to make more money and improve the sector. Because many take part in a capitalist society, the bank makes more money.

9. It assists charity organizations: Economic freedom empowers charity organizations. What the motherless baby homes use in running their organization are purchased at lower price. With the action of the entrepreneurs, the materials needed do not cost an arm and a leg. Some men whose life turned a new leaf through this system of economy assist these charity homes as well. The famous Bill Gates is one of them. Buffet and some other wealthy people in the world have given out some percentages of their assets for charity and this is because the economy is free for them to partake in and make more profits. Buffett said that he would meet wealthy individuals in India and China to talk about philanthropy and stated that they hope the idea of generosity will spread (Wikipedia). A mother Teresa wants to use the materials available to her to feed, clothe, and comfort the greatest number of people. She was able to do this because the materials were sold at lower cost to her.

10. Countries that are ranked higher have a better education standard: The concern free economy shows to education sector is not left out in any way. Many who have succeeded in life due to free market have issued scholarships and other helps to the students. What is the standard of education in Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Chile, Mauritius, Denmark and USA when compared with that of nations that do embrace economic freedom? The difference is clear. Many instruments used for study in the USA, Cana, New Zealand and the likes are computerized, but come to a country like Nigeria, we are still battling with black boards and make use of materials that are outdated. The government finds it very difficult to promote the education sector of the country. People make money and assist the students through scholarships and competitions in countries that engage most in economic freedom. Some of the scholarships are Richmond GI Bill Scholarship, Presidential Scholarship, UK Armed Forces Scholarship, Provost’s Richmond & Kensington Access Scholarship, Alumni Scholarship, Phi Theta Kappa Scholarship, and the Chancellor’s Scholarship for Prior Academic Achievement (sourced from Richmond University in London). All these scholarships are offered in the United States of America which is ranked 10th in the economic free nations. Tell me why the education system in this country will not be of good standard when these scholarships are offered to the students?

11. It Promotes gender equality: Gender equity is the process of being fair to women and men. Gender inequality has been into existence for many years. The effort to promote gender equality has been feeling a bit under the weather (ill). Gender equality is attainable in nations that practise more free market system. With the advent of market globalization, the illness is being cured. Today, women are gaining balance in free market. According to the 2013 Global Entrepreneurship and Development Index (GEDI), USA and Australia were raked first and second respectively in promoting female entrepreneurs. This gives the female gender the sense of belonging in different countries of the world.

12. Economic freedom contributes in health standard: It promotes the health standards of free economic nations. Without the equipment, injections and the drugs, these hospitals fail to function. Those that engage in free economy make these available at a lower price. Enterprise imparts positively to the health department of countries. They go far and wide and import these equipments needed by countries. People who succeed in free enterprise donate properties and funds to health sectors.

Factors that Promote Economic Freedom

Fundamentally, there are many factors that enhance economic freedom. These factors are but not limited to:

  • Liberal Democracy;
  • The citizens;
  • Globalization.

1.0 Liberal Democracy: Democracy was “government of the people, by the people and for the people (Abraham Lincoln). The people in this government rule take part in decision making. It is not like the military rule where the government can wake up one day and enforce laws on the people. The citizens decide the places to establish their businesses and pilot their business affairs the way they want it. In Liberal Democracy, the properties of the entrepreneurs are well guided by the government.

2.0 The citizens: The citizens are the people that live in a particular country. They promote free enterprise by engaging in entrepreneurship. They work hard from day to day to put things real in the country. They promote economic freedom through their securities. The citizens are the people that stand as security men and women. When entrepreneurs’ goods and service rendering are secured, morale to invest in the business becomes increased.

3.0 Globalization: This is the process that businesses operate universally. Today, advertisements are run globally through many means. One stays at his comfort zone while adverts are paraded through the internet, television channels, radios and so many other means. This has really increased the popularity of many businesses. It has made newly established businesses to grow and compete with those who were established long time ago.


Conclusion

Economic Freedom has done many good in the universe today and promotes unity. The rankings of nations based on free economy system were discussed. Nations had improved in so many ways which includes poverty eradication, employment generation, good impact on education, banking, and so on due to economic freedom. Factors that promote economic freedom had been explained.

Nations that are still taking advantage of her masses by adopting non-free economic system should try to have second thoughts. When this is done, let them keep their hands crossed to testify the positive impact ahead.


Endnotes

  • principles for a Free Society by Dr. Nigel Ashford, Second edition, p. 28.
  • Twenty Myths About Market by Palmer, Tom. 2009, p.175.
  • Principles for a Free Society by Dr. Nigel Ashford, Second edition, p. 32.
  • Seven Principles of Sound Public Policy by Lawrence W. Reed, p. 3.
  • Principles for a Free Society by Dr. Nigel Ashford, Second edition, p. 30.
  • Globalization: Threat or Opportunity to Women in the Developing World? by Jo Kwong,

p. 9.

  • Twenty Myths about Market by Palmer, Tom. 2009, p. 156.
  • Dell Launches World’s first Gender-GEDI Female Entrepreneurship Index on 06/04/13 by Istanbul, Turkey.


Other References

  • Thisday live news.
  • 2013 Index of Economic Freedom.
  • Global Entrepreneurship and Development Index (GEDI).
  • Wikipedia.
  • Richmond University in London.

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    • Uzochukwu Mike profile image
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      Uzochukw Mike 3 years ago from Oba

      This piece is very sound

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