The floor of the Hong Kong stock market
© AFP/File Laurent Fievet HONG KONG, Jan. 16 -- For the 13th consecutive year, residents of Hong Kong enjoy the world's freest economy, according to the 2007 "Index of Economic Freedom" published annually by The Wall Street Journal and The Heritage Foundation.
This year's Index provides an even more precise snapshot of economic
freedom than its predecessors. It uses a new methodology that draws upon the best and latest information, including World Bank data previously unavailable to outside researchers. It also uses a new rating system: Countries are ranked on a 0-to-100 scale, in which a higher score represents greater freedom-a switch from the 5-1 ranking of previous Indices.
"Hong Kong is clearly blazing a trail for others to follow," write
Index editors Tim Kane, Kim Holmes and Mary Anastasia O'Grady. The former British colony leads all others in six of the Index's 10 factors.
Yet Asia remains a study in contrasts, the editors note. The region is home to the two freest economies in the world, Hong Kong and Singapore, and four of the top five. This year, Australia moved up to third and New Zealand clocked in at number five.
At the same time, Asia is also home to several "repressed" economies, including those of Turkmenistan, Vietnam, Laos, Bangladesh and Burma as well as North Korea, which the Index has rated as the world's most economically repressed country for more than 10 years.
Hong Kong's score did drop a bit, its measure of economic freedom is 89.3, down 1.6 points from last year. But it still leads the world by a wide margin. Singapore is next at 85.7, down 2.8 from last year. The editors laud Singapore as "the top country in business freedom and labor freedom."
Asia's overall level of economic freedom (59.1) lags a bit below the
world average (60.6). But the editors predict this will change if two
economic giants press on with economic reform. "India and China are ranked 19th and 22nd in the region," the Index notes, making them "mostly unfree."
But "there is no denying that the winds of change are blowing in Asia,
particularly in India and China," which are being encouraged by fellow
Asian tigers Japan (5th in the region), Taiwan (6th) and South Korea (7th).
As in previous years, the Index ratings reflect an analysis of dozens of economic variables, grouped into 10 categories. But this year those categories have been somewhat refined. The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, freedom from government, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom.
Of the 157 countries ranked, only seven are classified as "free" (a score of 80 or higher). Another 23 are "mostly free" (70-79.9). The bulk of countries-107 economies-are either "moderately free" (60-60.9) or "mostly unfree" (50-50.9). Some 20 countries have "repressed" economies, with total freedom scores below 50 percent.
Under the new rating system, three economies dropped down a category: Kyrgyzstan and Sri Lanka from "moderately free" to "mostly unfree," and Bangladesh from "mostly unfree" to "repressed." No economies moved up in category.
This is the 13th consecutive year The Heritage Foundation and The Wall Street Journal have published the Index. (/PRNewswire-USNewswire/)