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South Africa’s disastrous decline in economic freedom during recent years from 41st to 91st has finally been arrested with a rise to 85th (out of 144 countries) in the latest Economic Freedom of the World Annual Report released today by the Free Market Foundation.

FMF Executive Director, Leon Louw, said, “The outlook for South Africa will be positive if this means that South Africa is back on the road towards the greater economic freedom we enjoyed during the first decade of transition to democracy.”

Our score on a scale of nought to ten rose from 6.49 to 6.75 (0 is unfree and 10 is free).

“This report exposes the tenacious myth that the financial crisis was due to excessive economic freedom. The crisis in the US and Europe followed the erosion of economic freedom in the countries concerned.”

Globally, the average economic freedom score rose to 6.83 in 2010, the most recent year available, after plummeting to its lowest level in nearly three decades with a score of 6.79 in 2009.

“Governments around the world embraced heavy-handed regulation and reckless spending in response to the government-created mortgage crisis in the US and the government debt crisis in Greece and other Mediterranean countries, reducing economic freedom in the short term and prosperity over the long term,” said Louw.

All five continents are represented in the global top 10.

Hong Kong again topped the rankings of 144 countries, followed by Singapore, New Zealand, and Switzerland. Australia and Canada tied for fifth overall.

The United States, long considered a champion of economic freedom, continued its protracted decline. It plunged to its lowest-ever ranking of 18th, down from 10th in 2008 and second in 2002.

Venezuela has the least economic freedom with Myanmar, Zimbabwe, Republic of Congo, and Angola joining it in the bottom five.

Countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberty, and longer life expectancies.

“The bottom-ranked countries offer a significantly lower quality of life, and worse scores by virtually every other objective measure,” said Louw.

The annual peer-reviewed Economic Freedom of the World report is produced by the Fraser Institute, Canada’s leading public policy think-tank, in cooperation with independent institutes in 90 countries and territories.

The Economic Freedom of the World report is the premier classification of economic systems, using 42 objective and independently generated variables. Economic freedom consists of personal choice, voluntary exchange, freedom to compete, and security of property. The variables fall into five areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labour, and business.

South Africa scores in the five categories of economic freedom:

• Size of government: from 5.02 to 5.52
• Legal system and property rights: from 5.44 to 5.70
• Access to sound money: from 7.92 to 8.18
• Freedom to trade internationally: from 6.95 to 7.16
• Regulation of credit, labour and business: from 7.10 to 7.21

International Rankings
Hong Kong has the world’s freest economy, with a score of 8.90 out of 10, followed by Singapore (8.69), New Zealand (8.36), Switzerland (8.24), Australia and Canada (each 7.97), Bahrain (7.94), Mauritius (7.90), Finland (7.88), and Chile (7.84).

The rankings and scores of other large economies include: United States (18th), Japan (20th), Germany (31st), Korea (37th), France (47th), Italy (83rd), Mexico (91st), Russia (95th), Brazil (105th), China (107th), and India (111th).

Venezuela has the least economic freedom with Myanmar, Zimbabwe, Republic of Congo, and Angola joining it in the bottom five.

African and formerly Communist countries have enjoyed the largest increases in economic freedom: Rwanda (106th in 2000 to 44th), Malawi (114th to 84th), Ghana (101st to 53rd), Romania (110th to 42nd), Bulgaria (108th to 47th), and Albania (77th to 32nd).

Greatest declines since 2000 are Venezuela (94th to 123rd), Argentina (34th to 110th), Iceland (11th to 59th), and the United States (2nd to 19th).

In highest-ranked countries, the average income of the poorest 10 per cent was $11,382, compared to $1,209 for economically unfree countries. The poorest 10 per cent in the freest countries are twice as rich as the average population of the least free countries.

About the Economic Freedom Index
Economic Freedom of the World measures the degree to which the policies and institutions of countries support economic freedom. The annual report is published in conjunction with the Economic Freedom Network, a group of independent research and educational institutes in 90 countries and territories. The 2012 report was prepared by James Gwartney, Florida State University; Robert A. Lawson, Southern Methodist University; and Joshua Hall, Beloit College.

The 144 countries for which data are available, represent 95 per cent of the world’s population.

The full report is available at www.freetheworld.com. For more information, methodology, datasets, and previous reports, visit www.freetheworld.com. Also ‘Like’ the Economic Freedom Network on Facebook: www.facebook.com/EconomicFreedomNetwork.