The Heritage Foundation and the Wall Street Journal today released the 2004 Index of Economic Freedom, which is a practical reference guide to the world's economies, stating that Hong Kong has the most free economy, while North Korea rated the least free.

The Index includes country-by-country analyses and up-to-date data available on foreign investment codes, taxes, tariffs, banking regulations, monetary policy and black markets.

The editors of the Index address issues such as why some economies grow year after year while others remain mired in stagnation, and is there a secret to prosperity? Can others copy it? The evidence assembled in this 10th annual country-by-country report on the openness of economies worldwide shows that the road to growth is paved with liberty.

During the last seven years, countries that have done the most to improve their scores on the Index's 10 measures of economic freedom have, in general, experienced the highest rates of economic growth.

Those with the best scores in the 10 categories measured-trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation and informal (or black) market activity-enjoy higher standards of living and higher per capita incomes.

The latest data suggest that countries begin to see the benefits of opening their economies simply by starting or continuing the process.

The one-fifth of countries surveyed where Index scores improved the most enjoyed an average growth in gross domestic product of 4,89%, and the one fifth that improved the least, GDP grew at only about half that rate.

According to Index editors Marc Miles, Edwin Feulner and Mary Anastasia O'Grady, if countries slow or stop their progress, growth plummets.

In addition, data gathered for the 2004 Index suggests that of the 155 countries analysed, 75 scored better this year than last year and 11 had scores that were unchanged.

Overall, 16 countries are classified as having "free" economies, 55 as "mostly free," 72 as "mostly unfree" and 12 as "repressed".

Of these, the most free economy was Hong Kong, with Singapore a close second.

The least free was North Korea, followed by Libya and Zimbabwe.

Of all the variables measured by the Index, "monetary policy," which examines inflation controls, demonstrated the most improvement worldwide.

Monetary policy scores improved in 30 nations and worsened in only nine, for a net worldwide improvement of 21 countries.

In general, the 2004 Index shows that more governments are refraining from intervening in their economies.

The editors also note a trend toward declining protection of property rights.

Seven nations weakened their safeguards of such rights and none-out of all 155 graded-strengthened them.

"Without strong property rights, an investor cannot be sure of his ability to lay claim in a business he builds," the report emphasises.

"As the risk involved in a business venture increases, investors and entrepreneurs are left reluctant and likely to put their money elsewhere," said one.

The editors suspended grading for five countries now in a state of "civil unrest or anarchy,” including Angola, Burundi, Congo, Sudan and Iraq.

In sub-Saharan Africa, Rwanda, one of the world's 10 worst countries last year in terms of declining economic freedom, displayed an astonishing turnaround to become this year's most-improved country.

Its progess was part of a promising trend in Africa, as four other countries-Ethiopia, Cape Verde, Senegal and Mauritania-finished among this year's 10 most improved.

Botswana claimed the region's No. 1 spot, even though its score worsened, and Zimbabwe, with sky-high unemployment and soaring inflation, brought up the rear.

With 21 countries improving and 15 declining, this region posted the second-biggest net gain.