econ free world 2010

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Economic Freedomo the World

2010 Annual Report

James Gwartney Joshua Hall Robert LawsonFlorida State University Beloit College Auburn University

with

Christopher J. Coyne John W. DawsonGeorge Mason University Appalachian State University

Horst Feldmann John LevendisUniversity of Bath Loyola University New Orleans

Russell S. Sobel Edward Peter Stringham

West Virginia University Fayetteville State University

2010


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Copyig 2010 by e Fase Isiue. All igs eseve. No pa o is book may be epouce i ay maewasoeve wiou wie pemissio excep i e case o bie quoaios emboie i ciical aicles a eviews.

Te auos o is book ave woke iepeely a opiios expesse by em ae, eeoe, ei ow a oo ecessaily eec e opiios o e suppoes, usees, o oe sa o e Fase Isiue. Tis publicaio io way implies a e Fase Isiue, is usees, o sa ae i avo o, o oppose e passage o, ay bill; o a eysuppo o oppose ay pa icula poliical pa y o caiae.

Publise i coopeaio wi e Ecoomic Feeom NewokEiig, esig, a ypeseig by Lisey Tomas MaiCove esig by Bill RayPie a bou i Caaa

Data available to researchers

Te ull aa se, icluig al l o e aa publise i is epo as well as aa omie ue o limie space, ca be ow-loae o ee a . Te aa le available ee coais e mos up-o-ae aaccuae aa o e Ecoomic Feeom o e Wol iex. Some vaiable ames a aa souces ave evolve ove e

yeas sice e s publicaio i 1996; uses soul cosul ealie eiios o eEconomic Freedom o the Worlda-ual epos o eails egaig souces a escipios o ose yeas. All eiios o e epo ae available i PDF

a ca be owloae o ee a . Howeve, uses ae always sogly ecouage o use eaa om is mos ece aa le as upaes a coecios, eve o ealie yeas aa, o occu. Uses oig log-emo logiuial suies ae ecouage o use e cai-like iex as i is e mos cosise oug ime. I you avepoblems owloaig e aa, please coac Jea-Faois Miai via e-mail o o

via elepoe +1.514.281.9550 ex. 306. I you ave ecical quesios abou e aa isel, please coac Robe Lawso(e-mail: ; elepoe: +1.334.844.3007) o Josua Hall (e-mail: ; elepoe:+1.608.363.2376). Please cie e aa se as:

Auos: James D. Gwaey, Josua C. Hall, a Robe Lawso

ile: 2010 Ecoomic Feeom Daase, publise iEconomic Freedom o the World: 2010 Annual Report

Publise: Fase Isiue

Yea: 2010

URL:

Cite this publication

Auos: James D. Gwaey, Josua C. Hall, a Robe Lawsoile:Economic Freedom o the World: 2010 Annual ReportPublise: Fase IsiueDae o publicaio: 2010Digial copy available om a

Cataloguing Inormation

Gwaey, James D.Ecoomic eeom o e wol aual epo / James D. Gwaey.

Aual.Descipio base o: 19972010 issue by James D. Gwaey, Josua C. Hall, a Robe Lawso, wi Cisope J. Coye,Jo W. Dawso, Hos Felma, Jo Leveis, Russell S. Sobel, a Ewa Pee Sigam.Issue also olie.ISSN 1482-471X; ISBN 978-0-88975-250-4 (2010 eiio).

1. Ecoomic isoy--1990- --Peioicals. 2. Ecoomic iicaos--Peioicals .I. Fase Isiue (Vacouve, B.C.) II. ile


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Economic Freedom of the World: 2010 Annual Report iii

Table o Contents

Executive Summary / v

Chapter 1 Economic Freedom o the World, 2008 / 1

Chapter 2 Country Data Tables / 21

Chapter 3 How Are Institutions Related? / 163

by Christopher J. Coyne and Russell S. Sobel

Chapter 4 Macroeconomic Volatility and Economic Freedom: A Preliminary Analysis / 175

by John W. Dawson

Chapter 5 Economic Freedom and Unemployment / 187

by Horst Feldmann

Chapter 6 The Relationship between Economic Freedom and Homicide / 203

by Edward Peter Stringham and John Levendis

Appendix Explanatory Notes and Data Sources / 219

Acknowledgments / 231

About the Authors / 232

About the Contributors / 233

About the Members o the Economic Freedom Network / 235


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Economic Freedom of the World: 2010 Annual Report v

Executive Summary

Economic Freedom o the World

Te iex publise iEconomic Freedom o the Worldmeasues e egee o wic e policies a isiuios ocouies ae suppoive o ecoomic eeom. Te coesoes o ecoomic eeom ae pesoal coice, voluay

excage, eeom o compee, a secuiy o pivaely owe popey. Foy-wo aa pois ae use o cosuca summay iex a o measue e egee o ecoomic eeom i ve boa aeas:

1 Size o Goveme: Expeiues, axes, a Eepises;

2 Legal Sucue a Secuiy o Popey Rigs;3 Access o Sou Moey;

4 Feeom o ae Ieaioally;5 Regulaio o Cei, Labo, a Busiess.

Economic reedom has suered its rst setback in decades

echain-linkedsummaryindex(exhibit1.4)permitscomparisonsovertime.eaverageeconomic-

eeom scoe ose om 5.53 (ou o 10) i 1980 o 6.74 i 2007, bu ell back o 6.67 i 2008, e mosece yea o wic aa ae available. Tis is e s eea o global ecoomic eeom i ecaes.

(See cape 1 o a iscussio.)

Inthisyearsindex,HongKongretainsthehighestratingforeconomicfreedom,9.05outof10.e

oe op 10 aios ae: Sigapoe (8.70), New Zeala (8.27), Swizela (8.08), Cile (8.03), Uie

States(7.96),Canada(7.95),Australia(7.90),Mauritius(7.82),andtheUnitedKingdom(7.81).

erankings(andscores)ofotherlargeeconomiesareGermany,24(7.46),Japan24(7.46),France35(7.32),

Ialy 66 (6.90), Mexico 69 (6.89), Russia 84 (6.62), Cia 82 (6.65), Iia 87 (6.51), a Bazil 102 (6.18).

ebottomtennationsare:Zimbabwe(3.57),Myanmar(3.81),Angola(3.89),Venezuela(4.33),Congo,

Republic o (4.75), Cogo, Democaic Republic (4.93), Ceal Aica Republic (4.77), Guiea-Bissau

(4.82), Buui (4.91), a Algeia (5.00).

Nations that are economically ree out-perorm non-ree nations in indicators o well-being

Nationsinthetopquartileofeconomicfreedomhadanaverageper-capitaGDPof$32,744in2007,com-

paredto$3,858forthosenationsinthebottomquartileinconstant2005internationaldollars(exh.1.6).

Inthemost-freequartile,theaverageincomeofthepoorest10%ofthepopulationwas$8,474com-

paredto$910forthoseintheleast-freequartile,inconstant2005internationaldollars(exh.1.9).

Interestingly,theaverageincomeofthepoorest10%inthemosteconomicallyfreenationsismore

a ouble e oveall aveage icome i e leas ee aios.


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vi Economic Freedom of the World: 2010 Annual Report

Lifeexpectancyis79.3yearsinthemost-freequartilebut59.9yearsintheleast-freequartile(exh1.10).

Peopleinnationsinthemost-freequartilereportalifesatisfactionof7.5outof10whilethoseinthe

leas-ee quaile epo a lie saisacio o 4.7 (ex. 1.11).

Nationsinthemost-freequartilehaveanaveragescoreof7.4forcorruptiononascaleof10,while

ose i e leas-ee quaile ave a aveage scoe o 2.6 (ex. 1.12).

Nationsinthetopquartilehaveanaveragescoreof1.6forpoliticalrightsandcivilfreedomsonascale

o 1 o 7, wee 1 maks e iges level, wile ose i e boom quaile ave a aveage scoe o

4.3 (ex. 1.13).

Chapter 1: Economic Freedom o the World, 2008

Te picipal auos o e epo, James Gwaey (Floia Sae Uivesiy), Robe Lawso (Aubu Uivesiy),

a Josua Hall (Beloi College), eview e causes o e acial cisis a e ecessio. Tey also iscuss e policyesposes a e poliical pocesses ou o wic ose esposes gew, a ow ese pocesses may avo gove-

me ieveio a a eucio i ecoomic eeom, wic pevesely is likely o exe e ecessio. Tey waa is pa ove e loge em woul lea o loss o ecoomic gow a vibacy. Tis igligs e impoace

o a objecive ecoomic eeom measue o big accouabiliy o e ebae. Te auos also eview e isoyo e ecoomic eeom pojec a escibe e cosucio o e iex.

Chapter 2: Country Data Tables

Deaile isoical iomaio is povie o eac o e 141 couies a eioies i e iex.

Chapter 3: How Are Institutions Related?

Cisope Coye (Geoge Maso Uivesiy) a Russell Sobel (Wes Vigiia Uivesiy) aalyze e aue o i-

siuioal eom usig aa o iee measues o eac couys may ecoomic a poliical isiuios. Teyask bo wee some isiuios ae easie o pemaely cage a oes, a wee ses o isiuios

mus be eome simulaeously o e cages o become pemae. Te mai esuls ae: (1) a mos omal,ecoomic isiuios (e.g., ax a egulaoy sucues) ca be pemaely eome bu a legal a igs-

base iomal isiuios (e.g., civil igs o Aea 2: Legal Sucue a Secuiy o Popey Rigs) e o esispemae cage; a (2) a ecoomic isiuios ae coiegae a eeoe mus move ogee o obaipemae cagesome isiuios simply cao be cage i isolaio. I ems o policy, is implies a ove

e log em, eoms o oe se o isiuios ae moe likely o become pemae i eoms o oe isiuiosae also ueake. o acieve meaigul avaces i ecoomic eeom, couies mus ueake simulaeous

eom o e iee aeas o e iex, ae a yig o cage oe a a ime. Cages o oe aea i isolaioe o ecay back o pio levels uless accompaie by cages i oe aeas.

Chapter 4: Macroeconomic Volatility and Economic Freedom: A Preliminary Analysis

Jo Dawso (Appalacia Sae Uivesiy) examies e empiical elaiosip bewee busiess-cycle volailiya ecoomic eeom acoss couies. I a ivese sample o 85 couies, e esuls sugges a sigicaly ega-

ive elaiosip bewee volailiy a a boa measue o eeomeve ae coollig o oe eemias ocoss-couy volailiy a usig a isumeal vaiables poceue o accou o e likely eogeeiy o ecoomic


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Economic Freedom of the World: 2010 Annual Report vii

eeom. Amog e uelyig compoes o e eeom iex, all bu e size o goveme also ave a sigi-

caly egaive elaiosip wi volailiy; a is, i ese aeas, ecoomic eeom euces volailiy. Size o gove-me is ou o ave a sigicaly posiive elaiosip wi volailiy. Measues o cages i eeom a e vola-iliy o eeom ae ou o be saisically isigica, suggesig a eeom is o amog e socks a cause

busiess cycles. Rae, eeom appeas o allow ecoomies o bee ajus o ose socks a ive busiess cycles.

Chapter 5: Economic Freedom and Unemployment

Hos Felma (Uivesiy o Ba) examies e elaiosip bewee ecoomic eeom a uemployme.

Accoig o is egessio esuls, moe ecoomic eeom appeas o euce uemployme. Te magiue oe eec seems o be subsaial, especially amog youg people. Give e lage coss o uemployme a e

eomous umbe o jobless people wolwie, paiculaly i e wake o e cue acial a ecoomic cisis,govemes soul cosie iceasig ecoomic eeom as a meas o eucig uemployme. o illusae e

magiue o e eecs, Felma compaes e Uie Saes a Ialy a s a, i Ialy a ejoye e sameegee o ecoomic eeom as e Uie Saes, is uemployme ae mig ave bee 1.7 peceage pois lowe

amog e oal labo oce a bewee 3.5 a 3.9 peceage pois lowe amog you, oe acos beig equal.

Chapter 6: The Relationship between Economic Freedom and Homicide

Ewa Pee Sigam (Fayeeville Sae Uivesiy) a Jo Leveis (Loyola Uivesiy New Oleas) cosie

e quesio: Does ecoomic eeom lea o moe o less coic? Numeous auos ague a makes ceaecoic, weeas may avocaes o ecoomic eeom om Aam Smi o Milo Fiema ague e oppo-

sie. Sigam a Leveis examie e vaious ieas abou wy ecoomic eeom may euce coic a wygoveme ieveio mig icease i. Te, ey look a coss-aioal aa o eemie wee measues o

makes a omicies ae coelae a a, i a coss secio o couies, measues o ecoomic eeomae sigicaly a egaively coelae wi omicie aes. Tese esuls ol ue vaious ess o obusess.

Iceases i ecoomic eeom o appea o be associae wi eceases i omicie aes.


Te ull aa se, icluig all o e aa publise i is epo as well as aa omie ue o limie space, ca be

owloae o ee a . Te aa le available ee coais e mos up-o-ae a accuae aa o e Ecoomic Feeom o e Wol iex. Some vaiable ames a aa souces ave

evolve ove e yeas sice e s publicaio i 1996; uses soul cosul ealie eiios o eEconomic Freedomo the Worldaual epos o eails egaig souces a escipios o ose yeas. All eiios o e epo aeavailable i PDF a ca be owloae o ee a . Howeve, uses ae always sogly

ecouage o use e aa om is mos ece aa le as upaes a coecios, eve o ealie yeas aa, ooccu. Uses oig log-em o logiuial suies ae ecouage o use e cai-like iex as i is e mos

cosise oug ime. I you ave poblems owloaig e aa, please coac Jea-Faois Miai via e-mailo o via elepoe +1.514.281.9550 ex. 306. I you ave ecical quesios abou e

aa isel, please coac Robe Lawso (e-mail: ; elepoe: +1.334.844.3007) o Josua Hall(e-mail: ; elepoe: +1.608.363.2376). Please cie e aa se as:


ile: 2010 Ecoomic Feeom Daase, publise iEconomic Freedom o the World: 2010 Annual ReportPublise: Fase Isiue

Yea: 2010URL:


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Economic Freedom of the World: 2010 Annual Report 1

I as bee ealy a quae o a ceuy sice MiloFiema a Micael Walke ose e iiial mee-

ig o a seies o coeeces a eveually le o eiex publise i Economic Freedom o the World

(EFW). Tese coeeces, el om 1986 o 1994, aa sigle objecive: e evelopme o a clealy ee

measue o ecoomic eeom o a lage se o couies.Moeove, coeece paicipas wae e measue

o be as objecive a aspae as possible. Te goalso is pojec ave bee ucage uig e 25 yeas

o is exisece.Tee was cosieable ebae abou e aue

o ecoomic eeom a ose ealy coeeces bu acosesus emege a e coe coceps o ecoomic

eeom wee sel-owesip, o-ieeece, a epoecio o people a ei popey om ivasios by

oes. Sel-owesip a o-ieeece imply aiiviuals ave a ig o coose o emselveso

ecie ow ey will use ei ime, ales, a esouces.

O e oe a, ey o o ave a ig o e ime,ales, a esouces o oes. Pu aoe way, ii-

viuals o o ave a ig o ake igs om oes o

ema a oes povie igs o em. Ecoomiceeom is pese we auls ae ee o pouce, co-

sume, a ae wi oes as log as ei acios o oam e peso o popey o oes. Use o violece,

e, au, a pysical ivasios ae o pemissiblebu, oewise, iiviuals wo ae ecoomically ee aeee o coose a compee as ey see .

Te iex publise i Economic Freedom o the

World(EFW) is esige o measue e cosisecy o a

aios isiuios a policies wi is cocep o sel-owesip. Te ou coesoes o ecoomic eeom ae

personalchoice

voluntaryexchangecoordinatedbymarkets

freedomtoenterandcompeteinmarkets

protection of persons and their property from

aggessio by oes.

ese ou uepi e EFW iex. Pu simply, isi-uios a policies ae cosise wi ecoomic ee-

om we ey pemi iiviuals o coose o em-selves, ee io voluay ageemes wi oes,

a poec iiviuals a ei popey om agges-sos. I oe o acieve a ig EFW aig, a cou-

y mus povie secue poecio o pivaely owepopey, eveae eoceme o coacs, a a

sable moeay eviome. I also mus keep axeslow, eai om ceaig baies o bo omesic

a ieaioal ae, a ely moe ully o ma-kes ae a e poliical pocess o allocae goos

a esouces.Fom 1980 o 2008, ee was a gaual bu seay

moveme owa ecoomic eeom. Numeous su-ies ave sow a couies wi moe ecoomic ee-

om gow moe apily a acieve ige levels o pecapia icome a ose a ae less ee. Similaly,

ee is a posiive elaiosip bewee cages i eco-

omic eeom a e gow o pe-capia icome.Moeove, as pe-capia icome as gow, e wolspovey ae as eclie a mos o is pogess as

occue i couies a ave mae subsaial movesowa ige levels o ecoomic eeom. Ecoomic

gow is pimaily e esul o gais om ae, capi-al ivesme, a e iscovey o impove po-

ucs, lowe-cos poucio meos, a bee wayso oig igs. Give ese souces o gow apospeiy, i is o supisig a iceases i eco-

omic eeom a impovemes i qualiy o lie aeclosely elae.

As e wol cooe acial isabiliy aecoomic eclie i 2008, e mea ecoomic eeom

aig ell o e s ime i seveal ecaes. As wemeioe i las yeas epo, e wol ow aces a

siuaio simila o a o e Gea Depessio. Duige 1930s, pevese ecoomic policies asome a

omal cyclical owu io a ecae-log ea o a-sip a sueig. Te leg a seveiy o e Gea

Chapter 1: Economic Freedom o the World, 2008


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2 Chapter 1: Economic Freedom of the World, 2008

Depessio wee e esul o a sap moeay co-

acio, imposiio o ae esicios, ige axes,iceases i goveme speig ace wi eb,pice cools, a uceaiy ceae by cosa pol-

icy cages a wee suppose o ase e e o ecisis. Eve oug i was cause by pevese policies,

e Gea Depessio le o moe goveme egula-io, gow o goveme speig, a eucios i

ecoomic eeom.Wile e cue ecoomic owu is a less

sevee a a o e Gea Depessio, bo e u-ameal cause a e policy esposes ae simila. I

e Uie Saes, pevese cei expasio a egula-oy policies wee e pimay cause o e cue cisis.

Seekig o pomoe moe aoable ousig, poliiciasexpae e availabiliy o cei, a impose egula-

ios a coamiae e qualiy o mogages (e.g.,loas wi lile o o ow payme, excessively lage

loas elaive o icome, a loas o uqualie boow-es wi a poo cei isoy). Te esul: a ususai-

able ousig pice boom ollowe by e bus, a eveu-ally iceases i e eaul a oeclosue aes as eavily

iebe boowes wee uable o make e paymes oe loas e egulaos aage o em. Te owu

i e ousig iusy soo spea o oe secos ae coamiae mogage-backe secuiies wee ma-

kee ougou e wol, leaig o a acial cisis.Te policy espose o e cisis as also bee simila o

a o e Gea Depessio: moe egulaio, gow o

goveme speig ace by eb, a cosa pol-icy cages a ave ceae uceaiy a uemiepivae-seco aciviy.

Will e pevese policies a cause e cuecisis lea o sill moe goveme ieveio a egu-

laio jus as i i uig e Gea Depessio? We aeow i e mis o a gea ebae o is issue. Te ou-

come o is ebae is igly impoa because ee is aamaic ieece i e iceive o poucive aciobewee a make ecoomy a oe a is maage a

iece by e poliical pocess. Wi makes, posa losses will iec people owa poucive acios

a away om upoucive a couepoucive oes.I a busiess is goig o be successul i a make ecoomy,

i mus bi esouces away om oes a use em osupply goos a people value eoug o pay pices su-

cie o cove ei coss. Pos a losses also poviepeople wi a sog iceive o iovae, a iscove

poucio meos wi lowe coss a ew poucsa people value igly elaive o cos. Tis iceive

o use esouces poucively a iscove bee ways

o oig igs is e ivig oce uelyig ecoomicgow a pogess.

Te iceive sucue o e poliical pocess is

vasly iee. Tee is oig compaable o posa losses a will cosisely iec esouces io po-

ucive pojecs a away om ose a ae coue-poucive. Poliicias will allocae esouces owa e

poliically poweulose wo ca povie em wie mos voes, campaig us, ig payig jobs o

poliical allies a, yes, eve bibes. Tee is o easo oexpec a is iceive sucue will cael esouces

io poucive, a away om couepoucive, poj-ecs. Iovaos a eepeeus will be isavaage

by is sysem because i will o be eoug o poucepoucs a cosumes value igly elaive o cos;

oe will also ave o compee o poliical avoiism acae o e views o e poliical class. Te esul: moe

esouces will be use o obai poliical avosecoo-miss ee o is as e-seekiga ewe caele

io poucive aciviies.As is ebae uols, i is impoa o isi-

guis bewee make eepeeus a coy capial-iss. Make eepeeus succee by poviig cus-

omes wi bee poucs, moe eliable sevice, alowe pices a ae available elsewee. Tey succee

by ceaig weal: by poucig goos a sevices aae wo moe a e value o e esouces equie

o ei poucio. Coy capialiss ae iee: ey

ge aea oug subsiies, special ax beaks, egula-oy avos, a oe oms o poliical avoiism. Raea poviig cosumes wi bee poucs a aac-

ive pices, coy capialiss om a alliace wi polii-cias. Te coy capialiss povie e poliicias wi

coibuios, oe poliical esouces, a, i somecases, bibes i excage o subsiies a egulaios

a give em a avaage elaive o oe ms. Raea ceae weal, coy capialiss om a coaliio wipoliical ofcials o plue weal om axpayes a

oe ciizes.Te Gea Debae bewee e popoes o lim-

ie goveme a ope makes o e oe a aose avoig collecivism a poliical iecio o e

ecoomy o e oe igligs e impoace o aaccuae a objecive measue o ecoomic eeom. Te

iex publise i Economic Freedom o the Worldpo-vies a measue a will elp oe ack e iecio o

is ebae, wic is sue o aec e pospeiy o ewol i e yeas immeiaely aea.


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The Economic Freedom o the World index, 2008

Te cosucio o e iex publise i Economic

Freedom o the World (EFW iex) is base o ee

impoa meoological piciples. Fis, objecivecompoes ae always peee o ose a ivolve

suveys o value jugmes. Give e muliime-sioal aue o ecoomic eeom a e impoace

o legal a egulaoy elemes i is someimes eces-say o use aa base o suveys, expe paels, a

geeic case suies. o e ulles exe possible, ow-eve, e iex uses objecive compoes. Seco, e

aa use o cosuc e iex aigs ae om exealsouces suc as e Ieaioal Moeay Fu, Wol

Bak, a Wol Ecoomic Foum a povie aao a lage umbe o couies. Daa povie iecly

om a souce wii a couy ae aely use, a olywe e aa ae uavailable om ieaioal souces.

Impoaly, e value jugmes o e auos o oesi e Ecoomic Feeom Newok ae eve use o ale

e aw aa o e aig o ay couy. Ti, aspa-ecy is pese ougou. Te epo povies io-

maio abou e aa souces, e meoology use oasom aw aa io compoe aigs, a ow e

compoe aigs ae use o cosuc bo e aeaa summay aigs. Complee meoological eails

ca be ou i Appeix: Explaaoy Noes a DaaSouces (page 219). Te eie aa se use i e co-

sucio o e iex is eely available o eseaces a

www.eeewol.com.Exibi 1.1 iicaes e sucue o e EFW iex.

Te iex measues e egee o ecoomic eeom pes-

e i ve majo aeas: [1] Size o Goveme: Expeiues,a axes, Eepises; [2] Legal Sucue a Secuiy o

Popey Rigs; [3] Access o Sou Moey; [4] Feeomo ae Ieaioally; [5] Regulaio o Cei, Labo,

a Busiess.Wii e ve majo aeas, ee ae 23 compo-

es i is yeas iex. May o ose compoes ae

emselves mae up o seveal sub-compoes. I oal,e iex compises 42 isic vaiables. Eac compo-

e a sub-compoe is place o a scale om 0 o 10a eecs e isibuio o e uelyig aa. Te

sub-compoe aigs ae aveage o eemie eaccompoe. Te compoe aigs wii eac aea ae

e aveage o eive aigs o eac o e ve aeas. Iu, e ve aea aigs ae aveage o eive e sum-

may aig o eac couy. Followig is a oveview oe ve majo aeas.

Area 1: Size o Government: Expenditures,

Taxes, and Enterprises

Te ou compoes o Aea 1 iicae e exe owic couies ely o e poliical pocess o allocae

esouces a goos a sevices. We govemespeig iceases elaive o speig by iiviuals,

ouseols a busiesses, goveme ecisio-makigis subsiue o pesoal coice a ecoomic eeom

is euce. Te s wo compoes aess is issue.Goveme cosumpio as a sae o oal cosumpio

(1A) a ases a subsiies as a sae o GDP (1B)ae iicaos o e size o goveme. We gove-

me cosumpio is a lage sae o e oal, poliicalcoice is subsiue o pesoal coice. Similaly, we

govemes ax some people i oe o povie as-es o oes, ey euce e eeom o iiviuals o

keep wa ey ea.Te i compoe (1C) i is aea measues

e exe o wic couies use pivae ae agoveme eepises o pouce goos a sevices.

Goveme ms play by ules a ae iee omose o wic pivae eepises ae subjec. Tey ae

o epee o cosumes o ei eveue o oivesos o capial. Tey oe opeae i poece ma-

kes. Tus, ecoomic eeom is euce as govemeeepises pouce a lage sae o oal oupu.

Te ou compoe (1D) is base o (Di) eop magial icome ax ae a (Dii) e op ma-

gial icome a payoll ax ae a e icome es-

ol a wic ese aes begi o apply. Tese wo sub-compoes ae aveage o calculae e op magial axae (1D). Hig magial ax aes a apply a elaively

low icome levels ae also iicaive o eliace upo gov-eme. Suc aes ey iiviuals e uis o ei

labo. Tus, couies wi ig magial ax aes alow icome esols ae ae lowe.

ake ogee, e ou compoes o Aea 1measue e egee o wic a couy elies o pesoalcoice a makes ae a goveme buges a

poliical ecisio-makig. Teeoe, couies wi lowlevels o goveme speig as a sae o e oal, a

smalle goveme eepise seco, a lowe magialax aes ea e iges aigs i is aea.

Area 2: Legal Structure and Security o Property Rights

Poecio o pesos a ei igully acquie pop-ey is a ceal eleme o ecoomic eeom a a civil

sociey. Iee, i is e mos impoa ucio o gov-eme. Aea 2 ocuses o is issue. Te key igeies


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Exhibit 1.1: The Areas, Components, and Sub-Components o the EFW Index

1 Size o Government: Expenditures, Taxes,

and Enterprises

A General government consumption spending

as a percentage o total consumption

B Transers and subsidies as a percentage o GDP

C Government enterprises and investment

D Top marginal tax rate

i Top marginal income tax rate

ii Top marginal income and payroll tax rates

2 Legal Structure and Security o Property Rights

A Judicial independence (GCR)

B Impartial courts (GCR)

C Protection o property rights (GCR)

D Military intererence in rule o law and

the political process (ICRG)

E Integrity o the legal system (ICRG)

F Legal enorcement o contracts (DB)

G Regulatory restrictions on the sale o real property (DB)

3 Access to Sound MoneyA Money growth

B Standard deviation o ination

C Ination: Most recent year

D Freedom to own oreign currency bank accounts

4 Freedom to Trade Internationally

A Taxes on international trade

i Revenues rom trade taxes

(% o trade sector)

ii Mean tari rate

iii Standard deviation o tari rates

B Regulatory trade barriers

i Non-tari trade barriers (GCR)

ii Compliance cost o importing & exporting (DB)

C Size o trade sector relative to expected

D Black-market exchange rates

E International capital market controls

i Foreign ownership / investment restrictions (GCR)

ii Capital controls

5 Regulation o Credit, Labor, and Business

A Credit market regulations

i Ownership o banks

ii Foreign bank competition

iii Private sector credit

iv Interest rate controls / negative real interest rates

B Labor market regulations

i Hiring regulations and minimum wage (DB)

ii Hiring and ring regulations (GCR)

iii Centralized collective bargaining (GCR)

iv Hours regulations (DB)

v Mandated cost o worker dismissal (DB)

vi Conscription

C Business regulations

i Price controls

ii Administrative requirements (GCR)

iii Bureaucracy costs (GCR)

iv Starting a business (DB)

v Extra payments / bribes (GCR)

vi Licensing restrictions (DB)

vii Cost o tax compliance (DB)

GCR = Global Competitiveness Report; ICRG = International Country Risk Guide; DB = Doing Business (see Appendix or bibliographical inormation).


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o a legal sysem cosise wi ecoomic eeom ae

ule o law, secuiy o popey igs, a iepeejuiciay, a a impaial cou sysem. Compoesiicaig ow well e poecive ucio o gove-

me is peome wee assemble om ee pimaysouces: eInternational Country Risk Guide, e GlobalCompetitiveness Report, a e Wol Baks Doing

Business pojec.

Secuiy o popey igs, poece by e uleo law, povies e ouaio o bo ecoomic ee-

om a e efcie opeaio o makes. Feeom oexcage, o example, is meaigless i iiviuals o

o ave secue igs o popey, icluig e uis oei labo. We iiviuals a busiesses lack co-

ece a coacs will be eoce a e uis o eipoucive eos poece, ei iceive o egage i

poucive aciviy is eoe. Peaps moe a ay oeaea, is aea is esseial o e efcie allocaio o

esouces. Couies wi majo eciecies i is aeaae ulikely o pospe egaless o ei policies i e

oe ou aeas.

Area 3: Access to Sound Money

Moey oils e weels o excage. A absece o sou

moey uemies gais om ae. As Milo Fiemaiome us log ago, iaio is a moeay peom-

eo, cause by oo muc moey casig oo ew goos.Hig aes o moeay gow ivaiably lea o iaio.

Similaly, we e ae o iaio iceases, i also es

o become moe volaile. Hig a volaile aes o ia-io iso elaive pices, ale e uameal ems olog-em coacs, a make i viually impossible o

iiviuals a busiesses o pla sesibly o e uue.Sou moey is esseial o poec popey igs a,

us, ecoomic eeom. Iaio eoes e value opopey el i moeay isumes. We gove-

mes ace ei expeiues by ceaig moey, ieec, ey ae expopiaig e popey a violaige ecoomic eeom o ei ciizes.

Te impoa ig is a iiviuals ave accesso sou moey: wo povies i makes lile ieece.

Tus, i aiio o aa o a couys iaio a isgovemes moeay policy, i is impoa o cosie

ow ifcul i is o use aleaive, moe ceible, cu-ecies. I bakes ca oe savig a ceckig accous

i oe cuecies o i ciizes ca ope oeig bakaccous, e access o sou moey is icease a

ecoomic eeom expae.Tee ae ou compoes o e EFW iex i

Aea 3. All o em ae objecive a elaively easy o

obai a all ave bee iclue i e ealie eiios

o e iex. Te s ee ae esige o measue ecosisecy o moeay policy (o isiuios) wi log-em pice sabiliy. Compoe 3D is esige o mea-

sue e ease wi wic oe cuecies ca be usevia omesic a oeig bak accous. I oe o ea

a ig aig i is aea, a couy mus ollow policiesa aop isiuios a lea o low (a sable) aes

o iaio a avoi egulaios a limi e abiliy ouse aleaive cuecies.

Area 4: Freedom to Trade Internationally

I ou moe wol o ig ecology a low coss ocommuicaio a aspoaio, eeom o excage

acoss aioal bouaies is a key igeie o ecoomiceeom. May goos a sevices ae ow eie po-

uce aboa o coai esouces supplie om aboa.Voluay excage is a posiive-sum aciviy: bo a-

ig paes gai a e pusui o e gai povies emoivaio o e excage. Tus, eeom o ae ie-

aioally also coibues subsaially o ou moelivig saas.

I espose o poeciois ciics a spe-cial-iees poliics, viually all couies aop ae

esicios o vaious ypes. ais a quoas ae obvi-ous examples o oablocks a limi ieaioal ae.

Because ey euce e coveibiliy o cuecies,cools o e excage ae also ie ieaioal

ae. Te volume o ae is also euce i e passage

o goos oug cusoms is oeous a ime cosum-ig. Someimes ese elays ae e esul o amiisa-ive iefciecy wile i oe isaces ey eec e

acios o coup ofcials seekig o exac bibes. Ibo cases, ecoomic eeom is euce.

Te compoes i is aea ae esige o mea-sue a wie vaiey o esais a aec ieaioal

excage: ais, quoas, ie amiisaive esais,a excage ae a capial cools. I oe o ge aig aig i is aea, a couy mus ave low ais, a

ae seco a is lage a expece, easy cleaacea efcie amiisaio o cusoms, a eely cove-

ible cuecy, a ew cools o e moveme o capial.

Area 5: Regulation o Credit, Labor, and Business

We egulaios esic ey io makes a ie-

ee wi e eeom o egage i voluay excage,ey euce ecoomic eeom. Te aea o e iex

ocuses o egulaoy esais a limi e eeom oexcage i cei, labo, a pouc makes. Te s

compoe (5A) eecs coiios i e omesic cei


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make. Te s wo sub-compoes povie eviece

o e exe o wic e bakig iusy is omiaeby pivae ms a wee oeig baks ae pemieo compee i e make. Te al wo sub-compoes

iicae e exe o wic cei is supplie o e pi-vae seco a wee cools o iees aes ie-

ee wi e make i cei. Couies a use a pivaebakig sysem o allocae cei o pivae paies a

eai om coollig iees aes eceive ige a-igs o is egulaoy compoe.

May ypes o labo-make egulaios iigeo e ecoomic eeom o employees a employes.

Amog e moe pomie ae miimum wages, is-missal egulaios, cealize wage seig, exesio

o uio coacs o opaicipaig paies, a co-scipio. Te labo-make compoe (5B) is esige

o measue e exe o wic ese esais upo eco-omic eeom ae pese. I oe o ea ig maks

i e compoe aig egulaio o e labo make, acouy mus allow make oces o eemie wages a

esablis e coiios o iig a ig, a eaiom e use o coscipio.

Like e egulaio o cei a labo makes,e egulaio o busiess aciviies (compoe 5C)

iibis ecoomic eeom. Te sub-compoes o 5Cae esige o ieiy e exe o wic egulaios

a bueaucaic poceues esai ey a eucecompeiio. I oe o scoe ig i is poio o e

iex, couies mus allow makes o eemie pices

a eai om egulaoy aciviies a ea eyio busiess a icease e cos o poucig po-ucs. Tey also mus eai om playig avoies, a

is, om usig ei powe o exac acial paymesa ewa some busiesses a e expese o oes.

Construction o Area and Summary ratings

Teoy povies us wi iecio egaig elemes

a soul be iclue i e ve aeas a e summayiex, bu i oes o iicae wa weigs soul be

aace o e compoes wii e aeas o amog eaeas i e cosucio o e summay iex. I woul

be ice i ese acos wee iepee o eac oe aa weig coul be aace o eac o em. Duig e

pas seveal yeas, we ave ivesigae seveal meoso weigig e vaious compoes, icluig piciple

compoe aalysis a a suvey o ecoomiss. We avealso ivie oes o use ei ow weigig sucue i

ey believe a i is peeable. I e al aalysis, e

summay iex is o vey sesiive o subsaial vaia-

ios i e weigs.Fuemoe, ee is easo o quesio wee

e aeas (a compoes) ae iepee o wok

ogee like a eam. Pu aoe way, ey may be likemoe like e weels, moo, asmissio, ive sa,

a ame o a ca. Jus as i is e bule o ese acosa uelies e mobiliy o a auo, i may be a bu-

le o acos a uelies e composiio o ecoomiceeom. Wi ega o a auomobile, wic is moe

impoa o mobiliy: e moo, weels, o asmis-sio? Te quesio cao be easily aswee because e

pas wok ogee. I ay o ese key pas beak ow,e ca is immobile. Isiuioal qualiy may be muc e

same. I ay o e key pas ae abse, e oveall eec-iveess is uemie.

As e esul o ese wo cosieaios, we oga-ize e elemes o e iex i a mae a seems

sesible o us bu we make o aemp o weig e com-poes i ay special way we eivig eie aea o

summay aigs. O couse, e compoe a sub-compoe aa ae available o eseaces wo woul

like o cosie aleaive weigig scemes a weecouage em o o so.

Summary Economic Freedom Ratings, 2008

Exibi 1.2 peses summay ecoomic eeom aigs,

soe om iges o lowes. Tese aigs ae o eyea 2008, e mos ece yea o wic compee-sivedataareavailable.HongKongandSingapore,once

agai, occupy e op wo posiios. Te oe aios ie op 10 ae New Zeala, Swizela, Cile, Uie

Saes, Caaa, Ausalia, Mauiius, a e UieKingdom.erankingsofothermajorcountriesinclude

Gema (24th), Japa (24th), Face (35th),Korea (37th),Spai (39th), Ialy (66th), Mexico (69th), Cia (82nd),Russia (84th), Iia (87th), a Bazil (102nd). Te e

lowes-ae couies ae Algeia, Democaic Republic oCogo, Buui, Guiea-Bissau, Ceal Aica Republic,

Republic o Cogo, Veezuela, Agola, Myama a,agai i las place, Zimbabwe.

Te EFW iex is calculae back o 1970 as eavailabiliy o aa allows; see e Couy Daa ables i

cape 2 o ou websie, , oiomaio om pas yeas. Because some aa o ealie

yeas may ave bee upae o coece, eseaces aealways ecouage o use e aa om e mos ece

aual epo o assue e bes-qualiy aa.


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0 2 4 6 8 1 0

Namibia 71

Papua New Guinea 70

Mexico 69

Poland 66

Montenegro 66

Italy 66

Nicaragua 65

Uruguay 62

Kyrgyz Republic 62

Belize 62

Slovenia 61

Greece 60

Thailand 58

Kazakhstan 58

Uganda 57

Mongolia 55

Latvia 55

Botswana 54

Trinidad & Tobago 51

Portugal 51

Guatemala 51

Armenia 50

Zambia 48

Albania 48

Jamaica 46

Czech Republic 46

Bahamas 45

Oman 43

Belgium 43

Jordan 42

Spain 39

Iceland 39

Honduras 39

Sweden 37

Korea, South 37

Bulgaria 36

France 35

Malta 33

Lithuania 33

Peru 32

Norway 31

Panama 30

Hungary 28

El Salvador 28

Costa Rica 27

Kuwait 24

Japan 24Germany 24

Georgia 23

Taiwan 22

Netherlands 21

Cyprus 20

Finland 19

Bahrain 18

Slovak Republic 16

Luxembourg 16

Austria 15

Denmark 14

United Arab Emirates 12

Estonia 12

Ireland 11

United Kingdom 10

Mauritius 9

Australia 8Canada 7

United States 6

Chile 5

Switzerland 4

New Zealand 3

Singapore 2

Hong Kong 1

0 2 4 6 8 1 0

Zimbabwe 141

Myanmar 140

Angola 139

Venezuela 138

Congo, Republic of 137

Central African Republic 136

Guinea-Bissau 135

Burundi 134

Congo, Democratic Republic 133

Algeria 132

Chad 131

Ethiopia 130

Niger 129

Syria 128

Ukraine 127

Sierra Leone 125

Nepal 125

Senegal 124

Cte dIvoire 123

Togo 121

Mozambique 121

Gabon 119

Cameroon 119

Pakistan 118

Benin 117

Burkina Faso 116

Tanzania 115

Argentina 114

Bangladesh 113

Sri Lanka 111

Bosnia and Herzegovina 111

Nigeria 110

Ecuador 109

Mali 107

Iran 107

Malawi 106

Vietnam 105

Bolivia 104

Madagascar 102

Brazil 102

Colombia 101

Morocco 100

Guyana 99

Serbia 97

Dominican Republic 97

Lesotho 96Mauritania 95

Barbados 94

Azerbaijan 93

Tunisia 90

Rwanda 90

Indonesia 90

Moldova 87

India 87

Croatia 87

Paraguay 86

Romania 85

Russia 84

South Africa 82

China 82

Israel 81

Egypt 80

Fiji 79Haiti 78

Malaysia 77

Philippines 76

Kenya 75

Turkey 74

Macedonia 72

Ghana 729.05

8.70

8.27

8.08

8.03

7.96

7.957.90

7.82

7.81

7.74

7.73

7.73

7.69

7.61

7.60

7.60

7.58

7.55

7.54

7.53

7.48

7.47

7.467.46

7.46

7.45

7.44

7.44

7.43

7.40

7.39

7.34

7.34

7.32

7.31

7.28

7.28

7.26

7.26

7.26

7.24

7.22

7.22

7.21

7.19

7.19

7.18

7.18

7.12

7.10

7.10

7.10

7.09

7.08

7.08

7.07

7.06

7.06

6.95

6.94

6.93

6.93

6.93

6.91

6.90

6.90

6.90

6.89

6.87

6.85

6.83

6.83

6.82

6.81

6.77

6.72

6.706.69

6.68

6.67

6.65

6.65

6.62

6.58

6.55

6.51

6.51

6.51

6.44

6.44

6.44

6.36

6.35

6.346.33

6.31

6.31

6.25

6.20

6.19

6.18

6.18

6.16

6.15

6.12

6.10

6.10

6.07

6.06

6.03

6.03

6.01

5.99

5.98

5.94

5.91

5.84

5.83

5.83

5.74

5.74

5.66

5.62

5.54

5.54

5.53

5.41

5.33

5.19

5.05

5.00

4.93

4.91

4.82

4.77

4.75

4.33

3.89

3.81

3.57

Exhibit 1.2: Summary Economic Freedom Ratings, 2008


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Area Economic Freedom Ratings(and Rankings), 2008

Exibi 1.3 peses e aigs (a, i paeeses, e

akigs) o eac o e ve aeas o e iex a o com-poes 5A, 5B, a 5C. A umbe o ieesig paes

emege om a aalysis o ese aa. Hig-icome ius-ial ecoomies geeally ak quie ig o Legal Sucue

a Secuiy o Popey Rigs (Aea 2), Access o SouMoey (Aea 3), a Feeom o ae Ieaioally

(Aea 4). Tei aigs wee lowe, oweve, o Size oGoveme: Expeiues, axes, a Eepises (Aea

1) a Regulaio o Cei, Labo, a Busiess (Aea 5).Tis was paiculaly ue o wese Euopea couies.

O e oe a, a umbe o evelopig aiossow e opposie pae. Albaia makes a ieesig

case suy. I sows a easoably size govemealoe is o eoug o eap e bees o ecoomic ee-

om. Te isiuios o ecoomic eeom, suc as eule o law a popey igs, as well as sou moey,

ae opeess, a sesible egulaio ae equie.Albaia ake quie ig a 8th i Size o Goveme:

Expeiues, axes, a Eepises (Aea 1) a 26th i

Sou Moey (Aea 3). Howeve, Albaia scoe pooly

i all e oe caegoies: 83rd i Legal Sucue aSecuiy o Popey Rigs (Aea 2), 99th i Feeomo ae Ieaioally (Aea 4), a 86th i Regulaio

(Aea 5). Despie elaively ig akigs i a couple oaeas, Albaias oveall akig was oly 58th.

Weakess i e ule o law a popey igs ispaiculaly poouce i sub-Saaa Aica, amog

Islamic aios, a o seveal aios a wee pa oe ome Sovie bloc, oug some o ese aios ave

mae sies owa impoveme. May Lai Ameicaa Soueas Asia aios also scoe pooly o ule o

law a popey igs. Te aios a ak pooly iis caegoy also e o scoe pooly i e ae a

egulaio caegoies, eve oug seveal ave easo-ably size govemes a sou moey.

Te ecoomies mos ope o oeig ae ae Hog

Kong,Singapore,andChilewhilethemost-closedecono-

mies wee Myama a Veezuela. Te leas egulaecouiesose a e op i Regulaio o Cei, Labo,

a Busiess (Aea 5)wee a ivese lo: Baamas, Hog

Kong,Belize,NewZealand,Fiji,Singapore,Bahrain,Canada,

Ausalia, a Icela.

AREAS COMPONENTS OF AREA

1Size ofGovernment

2Legal System &Property Rights

3Sound Money 4Freedom to TradeInternationally

5Regulation 5ACredit MarketRegulation

5bLabor MarketRegulation

5CBusinessRegulations

Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank)

Albania . () . () . () . () . () . () . () . ()

Algeria . () . () . () . () . () . () . () . ()

Angola . () . () . () . () . () . () . () . ()

Argentina . () . () . () . () . () . () . () . ()

Armenia . () . () . () . () . () . () . () . ()

Australia . () . () . () . () . () . () . () . ()

Austria . () . () . () . () . () . () . () . ()

Azerbaijan . () . () . () . () . () . () . () . ()

Bahamas . () . () . () . () . () . () . () . ()

Bahrain . () . () . () . () . () . () . () . ()

Bangladesh . () . () . () . () . () . () . () . ()

Barbados . () . () . () . () . () . () . () . ()

Belgium . () . () . () . () . () . () . () . ()

Belize . () . () . () . () . () . () . () . ()

Benin . () . () . () . () . () . () . () . ()

Bolivia . () . () . () . () . () . () . () . ()

Bosnia & Herzeg. . () . () . () . () . () . () . () . ()

Exhibit 1.3: Area Economic Freedom Ratings (Ranks), 2008


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1Size of

Government


3Sound Money

4Freedom to Trade

Internationally

5Regulation

5ACredit Market

Regulation

5bLabor Market

Regulation

5CBusiness

Regulations


Botswana . () . () . () . () . () . () . () . ()

Brazil . () . () . () . () . () . () . () . ()

Bulgaria . () . () . () . () . () . () . () . ()

Burkina Faso . () . () . () . () . () . () . () . ()

Burundi . () . () . () . () . () . () . () . ()

Cameroon . () . () . () . () . () . () . () . ()

Canada . () . () . () . () . () . () . () . ()

Central Afr. Rep. . () . () . () . () . () . () . () . ()

Chad . () . () . () . () . () . () . () . ()

Chile . () . () . () . () . () . () . () . ()

China . () . () . () . () . () . () . () . ()

Colombia . () . () . () . () . () . () . () . ()Congo, Dem. Rep. . () . () . () . () . () . () . () . ()

Congo, Rep. of . () . () . () . () . () . () . () . ()

Costa Rica . () . () . () . () . () . () . () . ()

Cte dIvoire . () . () . () . () . () . () . () . ()

Croatia . () . () . () . () . () . () . () . ()

Cyprus . () . () . () . () . () . () . () . ()

Czech Republic . () . () . () . () . () . () . () . ()

Denmark . () . () . () . () . () . () . () . ()

Dominican Rep. . () . () . () . () . () . () . () . ()

Ecuador . () . () . () . () . () . () . () . ()

Egypt . () . () . () . () . () . () . () . ()

El Salvador . () . () . () . () . () . () . () . ()

Estonia . () . () . () . () . () . () . () . ()

Ethiopia . () . () . () . () . () . () . () . ()

Fiji . () . () . () . () . () . () . () . ()

Finland . () . () . () . () . () . () . () . ()

France . () . () . () . () . () . () . () . ()

Gabon . () . () . () . () . () . () . () . ()

Georgia . () . () . () . () . () . () . () . ()

Germany . () . () . () . () . () . () . () . ()

Ghana . () . () . () . () . () . () . () . ()

Greece . () . () . () . () . () . () . () . ()

Guatemala . () . () . () . () . () . () . () . ()

Guinea-Bissau . () . () . () . () . () . () . () . ()

Guyana . () . () . () . () . () . () . () . ()

Haiti . () . () . () . () . () . () . () . ()

Honduras . () . () . () . () . () . () . () . ()

Hong Kong . () . () . () . () . () . () . () . ()

Hungary . () . () . () . () . () . () . () . ()

Iceland . () . () . () . () . () . () . () . ()

India . () . () . () . () . () . () . () . ()

Exhibit 1.3 (continued): Area Economic Freedom Ratings (Ranks), 2008


20/258



1Size of

Government


3Sound Money

4Freedom to Trade

Internationally

5Regulation

5ACredit Market

Regulation

5bLabor Market

Regulation

5CBusiness

Regulations


Indonesia . () . () . () . () . () . () . () . ()

Iran . () . () . () . () . () . () . () . ()

Ireland . () . () . () . () . () . () . () . ()

Israel . () . () . () . () . () . () . () . ()

Italy . () . () . () . () . () . () . () . ()

Jamaica . () . () . () . () . () . () . () . ()

Japan . () . () . () . () . () . () . () . ()

Jordan . () . () . () . () . () . () . () . ()

Kazakhstan . () . () . () . () . () . () . () . ()

Kenya . () . () . () . () . () . () . () . ()

Korea, South . () . () . () . () . () . () . () . ()

Kuwait . () . () . () . () . () . () . () . ()Kyrgyz Republic . () . () . () . () . () . () . () . ()

Latvia . () . () . () . () . () . () . () . ()

Lesotho . () . () . () . () . () . () . () . ()

Lithuania . () . () . () . () . () . () . () . ()

Luxembourg . () . () . () . () . () . () . () . ()

Macedonia . () . () . () . () . () . () . () . ()

Madagascar . () . () . () . () . () . () . () . ()

Malawi . () . () . () . () . () . () . () . ()

Malaysia . () . () . () . () . () . () . () . ()

Mali . () . () . () . () . () . () . () . ()

Malta . () . () . () . () . () . () . () . ()

Mauritania . () . () . () . () . () . () . () . ()

Mauritius . () . () . () . () . () . () . () . ()

Mexico . () . () . () . () . () . () . () . ()

Moldova . () . () . () . () . () . () . () . ()

Mongolia . () . () . () . () . () . () . () . ()

Montenegro . () . () . () . () . () . () . () . ()

Morocco . () . () . () . () . () . () . () . ()

Mozambique . () . () . () . () . () . () . () . ()

Myanmar . () . () . () . () . () . ()

Namibia . () . () . () . () . () . () . () . ()

Nepal . () . () . () . () . () . () . () . ()

Netherlands . () . () . () . () . () . () . () . ()

New Zealand . () . () . () . () . () . () . () . ()

Nicaragua . () . () . () . () . () . () . () . ()

Niger . () . () . () . () . () . () . () . ()

Nigeria . () . () . () . () . () . () . () . ()

Norway . () . () . () . () . () . () . () . ()

Oman . () . () . () . () . () . () . () . ()

Pakistan . () . () . () . () . () . () . () . ()

Panama . () . () . () . () . () . () . () . ()



21/258



1Size of

Government


3Sound Money

4Freedom to Trade

Internationally

5Regulation

5ACredit Market

Regulation

5bLabor Market

Regulation

5CBusiness

Regulations


Papua New Guinea . () . () . () . () . () . () . () . ()

Paraguay . () . () . () . () . () . () . () . ()

Peru . () . () . () . () . () . () . () . ()

Philippines . () . () . () . () . () . () . () . ()

Poland . () . () . () . () . () . () . () . ()

Portugal . () . () . () . () . () . () . () . ()

Romania . () . () . () . () . () . () . () . ()

Russia . () . () . () . () . () . () . () . ()

Rwanda . () . () . () . () . () . () . () . ()

Senegal . () . () . () . () . () . () . () . ()

Serbia . () . () . () . () . () . () . () . ()

Sierra Leone . () . () . () . () . () . () . () . ()Singapore . () . () . () . () . () . () . () . ()

Slovak Republic . () . () . () . () . () . () . () . ()

Slovenia . () . () . () . () . () . () . () . ()

South Africa . () . () . () . () . () . () . () . ()

Spain . () . () . () . () . () . () . () . ()

Sri Lanka . () . () . () . () . () . () . () . ()

Sweden . () . () . () . () . () . () . () . ()

Switzerland . () . () . () . () . () . () . () . ()

Syria . () . () . () . () . () . () . () . ()

Taiwan . () . () . () . () . () . () . () . ()

Tanzania . () . () . () . () . () . () . () . ()

Thailand . () . () . () . () . () . () . () . ()

Togo . () . () . () . () . () . () . () . ()

Trinidad & Tobago . () . () . () . () . () . () . () . ()

Tunisia . () . () . () . () . () . () . () . ()

Turkey . () . () . () . () . () . () . () . ()

Uganda . () . () . () . () . () . () . () . ()

Ukraine . () . () . () . () . () . () . () . ()

Unit. Arab Emirates . () . () . () . () . () . () . () . ()

United Kingdom . () . () . () . () . () . () . () . ()

United States . () . () . () . () . () . () . () . ()

Uruguay . () . () . () . () . () . () . () . ()

Venezuela . () . () . () . () . () . () . () . ()

Vietnam . () . () . () . () . () . () . () . ()

Zambia . () . () . () . () . () . () . () . ()

Zimbabwe . () . () . () . () . () . () . () . ()



22/258


The Chain-Linked Summary Index, 19702008

Te EFW aa ae available o may couies back o1970. Toug ime, e iex as become moe com-

peesive a e available aa moe complee. As aesul, e umbe a composiio o e compoes

o may couies will vay acoss ime. Tis peses apoblem simila o a cooe we calculaig GDP

o a pice iex ove ime we we kow a e ue-lyig goos a sevices ae cagig om oe yea o

aoe. I oe o coec o is poblem a assuecompaabiliy acoss ime, we ave oe e same ig

a saisicias aalyzig aioal icome o: we avecai-like e aa.

Te base yea o e cai-lik iex is 2000,a as a esul e cai-lik iex is o available o

ay couies ae sice a yea. Cages i a cou-ys cai-like iex oug ime ae base oly o

cages i compoes a wee pese i ajoiigyeas. Fo example, e 2005 cai-like aig is base

o e 2004 aig bu is ajuse base o e cagesi e uelyig aa bewee 2004 a 2005 o ose

compoes a wee pese i bo yeas. I e com-mo compoes o a couy i 2005 wee e same as

i 2004, e o ajusme was mae o e couys2005 summay aig. Howeve, i e 2005 compoes

wee lowe a ose o 2004 o e compoes pes-e i bo yeas, e e couy s 2005 summay aig

was ajuse owwa popoioally o eec is ac.

Coespoigly, i cases wee e aigs o ecommo compoes wee ige i 2005 a o 2004,

e couys 2005 summay aig was ajuse upwa

popoioally. Te cai-like aigs wee cosuceby epeaig is poceue backwa i ime o 1970 aowa i ime o 2008. Te cai-like meoology

meas a a couys aig will cage acoss ime pei-os oly we ee is a cage i aigs o compoes

pese uig ajace yeas. Tis is pecisely wa oewoul wa we makig compaisos acoss ime peios.

Exibi 1.4 sows e aveage cai-like eco-omic eeom iex aig o e 102 couies wi

aigs sice 1980. Te aveage level o ecoomic ee-om, as measue by e cai-like EFW iex, as

icease o 6.67 i 2008 om 5.53 i 1980; oweve, eaveage aig ell magially i e las yea (om 2007

o 2008). Muc o e log-em icease was ive byeucios i magial icome-ax aes, i o aggegae

axaio; impovemes i moeay policy; a globalae libealizaio.

Te Cai-Like Summay aigs o all yeas aeou i Exibi 1.5. Reseaces usig e aa o log-

em suies soul use ese cai-like aa. Teselogiuial aa make i possible o ollow e cages

i ecoomic eeom a aalyze ei impac ove alegy peio o ime.

Te cai-lik meoology was also use o eiveaea aigs. Te aigs (a akigs) o e cai-

like summay a aea aigs ae pesee i ecouy ables. Te couy ables also pese e ua-

juse summay a aea aigs, bu we ackig a-

igs acoss ime, e cai-lik aigs will pese a moeaccuae picue.

Exhibit 1.4: Average Chain-linked EFW Rating or the 102 countries with ratings since 1980

0

1

2

3

4

5

6

7

8

9

10

200820072006200520001995199019851980

5.53

AverageChain-lin

kedEFWr

ating

5.565.87

6.256.58 6.69

6.73 6.74 6.67


23/258


Big movers

Exibi 1.5 allows us o ack cages o couies oveime. Ove e loge u, bewee 1980 a 2008, eollowig ve couies icease e mos: ukey, Isael,

Peu, Ugaa, Gaa; wile e ollowig ell e mos:Veezuela, Zimbabwe, Myama, Malaysia, Nepal. I e

mos ece peio bewee 2005 a 2008, e lagesimpovemes occue i Gaa, Mauiius, Malawi,

ukey, a Rwaa, a e bigges eclies wee iAlgeia, Icela, Ca, Syia, a Iela. I e las yea,

as oe i Exibi 1.4, e aveage aig o e wol asa wole ell o e s ime i a quae o a ceuy. O

e 123 couies wi cai-like aigs i 2007 a

2008,88(71.5%)exhibitedratingdecreasesandonly35

(28.5%)recordedratingincreases.Greatdiversitycannow

be ou amog e aios o e ome Sovie Uiowi some couies like Esoia scoig ea e op a

oes like Ukaie scoig ea e boom.Te cai-like aig o e Uie Saes is ow

abou al a poi om 8.45 i 2000 o 7.93 i 2008, wicas se e accompayig akig ow o 6th om 3rd

i 2000. Lowe aigs i Aea 2: Legal Sucue aSecuiy o Popey Rigs wee pimaily esposible

o e aig eucio o e Uie Saes. I e lasaa yea, e massive icease i goveme boowig

i e Uie Saes also coibue o is aig eclie.

1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008Albania . . . . . . . . . . .

Algeria . . . . . . . . . . . . .

Angola

Argentina . . . . . . . . . . . . . . .

Armenia

Australia . . . . . . . . . . . . . . .

Austria . . . . . . . . . . . . . . .

Azerbaijan

Bahamas . . . . . . . . . . . . . .

Bahrain . . . . . . . . . . . . .

Bangladesh . . . . . . . . . . . . . .

Barbados . . . . . . . . . . . . . .

Belgium . . . . . . . . . . . . . . .

Belize . . . . . . . . . . . . .

Benin . . . . . . . . . . . . .

Bolivia . . . . . . . . . . . . .

Bosnia & Herzeg.

Botswana . . . . . . . . . . . . .

Brazil . . . . . . . . . . . . . . .

Bulgaria . . . . . . . . . . . .

Burkina Faso

Burundi . . . . . . . . . . . . . .

Cameroon . . . . . . . . . . . . .

Canada . . . . . . . . . . . . . . .

Central Afr. Rep. . . . . . . . . . . . .

Chad . . . . . . . . . . . .

Chile . . . . . . . . . . . . . . .

China . . . . . . . . . . . . .

Colombia . . . . . . . . . . . . . . .

Congo, Dem. Rep. . . . . . . . . . . . . . . .

Congo, Rep. of . . . . . . . . . . . . .

Exhibit 1.5: The Chain-Linked Summary Index o Ratings, 19702008


24/258


1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008

Costa Rica . . . . . . . . . . . . . .

Cte dIvoire . . . . . . . . . . . . .

Croatia . . . . . . . . . .

Cyprus . . . . . . . . . . . . . .

Czech Republic . . . . . . . . . .

Denmark . . . . . . . . . . . . . . .

Dominican Rep. . . . . . . . . . . . . .

Ecuador . . . . . . . . . . . . . . .

Egypt . . . . . . . . . . . . . .

El Salvador . . . . . . . . . . . . .

Estonia . . . . . . . . . .

Ethiopia

Fiji . . . . . . . . . . . . . .

Finland . . . . . . . . . . . . . . .

France . . . . . . . . . . . . . . .

Gabon . . . . . . . . . . . . .Georgia

Germany . . . . . . . . . . . . . . .

Ghana . . . . . . . . . . . . . .

Greece . . . . . . . . . . . . . . .

Guatemala . . . . . . . . . . . . . . .

Guinea-Bissau . . . . . . . . . . .

Guyana . . . . . . . . . .

Haiti . . . . . . . . . . . . .

Honduras . . . . . . . . . . . . .

Hong Kong . . . . . . . . . . . . . . .

Hungary . . . . . . . . . . . . .

Iceland . . . . . . . . . . . . . . .

India . . . . . . . . . . . . . . .

Indonesia . . . . . . . . . . . . . . .

Iran . . . . . . . . . . . . . . .

Ireland . . . . . . . . . . . . . . .

Israel . . . . . . . . . . . . . . .

Italy . . . . . . . . . . . . . . .

Jamaica . . . . . . . . . . . . .

Japan . . . . . . . . . . . . . . .

Jordan . . . . . . . . . . . . . .

Kazakhstan

Kenya . . . . . . . . . . . . . . .

Korea . . . . . . . . . . . . . . .

Kuwait . . . . . . . . . . . . .

Kyrgyz Republic

Latvia . . . . . . . . . .

Lesotho

Lithuania . . . . . . . . . .

Luxembourg . . . . . . . . . . . . . . .

Macedonia

Exhibit 1.5 (continued): The Chain-Linked Summary Index o Ratings, 19702008


25/258


1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008

Madagascar . . . . . . . . . . . . .

Malawi . . . . . . . . . . . . . .

Malaysia . . . . . . . . . . . . . . .

Mali . . . . . . . . . . . . . .

Malta . . . . . . . . . . . . .

Mauritania

Mauritius . . . . . . . . . . . . . .

Mexico . . . . . . . . . . . . . . .

Moldova

Mongolia

Montenegro

Morocco . . . . . . . . . . . . . . .

Mozambique

Myanmar . . . . . . . . . . . . .

Namibia . . . . . . . . . . .

Nepal . . . . . . . . . . . . .Netherlands . . . . . . . . . . . . . . .

New Zealand . . . . . . . . . . . . . . .

Nicaragua . . . . . . . . . . . . .

Niger . . . . . . . . . . . . .

Nigeria . . . . . . . . . . . . . . .

Norway . . . . . . . . . . . . . . .

Oman . . . . . . . . . . . .

Pakistan . . . . . . . . . . . . . . .

Panama . . . . . . . . . . . . . .

Papua New Guinea . . . . . . . . . . . .

Paraguay . . . . . . . . . . . . .

Peru . . . . . . . . . . . . . . .

Philippines . . . . . . . . . . . . . . .

Poland . . . . . . . . . . . .

Portugal . . . . . . . . . . . . . . .

Romania . . . . . . . . . . . .

Russia . . . . . . . . . .

Rwanda . . . . . . . . . . .

Senegal . . . . . . . . . . . . .

Serbia

Sierra Leone . . . . . . . . . . . . . .

Singapore . . . . . . . . . . . . . . .

Slovak Republic . . . . . . . . . .

Slovenia . . . . . . . . . .

South Africa . . . . . . . . . . . . . . .

Spain . . . . . . . . . . . . . . .

Sri Lanka . . . . . . . . . . . . .

Sweden . . . . . . . . . . . . . . .

Switzerland . . . . . . . . . . . . . . .

Syria . . . . . . . . . . . . . . .

Taiwan . . . . . . . . . . . . . . .



26/258


Concluding thoughts

Tis cape coclues wi some gaps illusaig

simple elaiosips bewee ecoomic eeom a

vaious oe iicaos o uma a poliical pog-ess (exibis 1.61.13, pp. 1719). Te gaps use eaveage o e cai-like EFW iex o e peio

om 1990 o 2008, beakig e aa io ou quailesoee om low o ig. Because pesisece is impo-

a a e impac o ecoomic eeom will be elove a legy ime peio, i is bee o use e aveage

aig ove a aily log ime spa ae a e cu-e aig o obseve e impac o ecoomic eeomo peomace.

Te gaps begi wi e aa o e elaiosipbewee ecoomic eeom a e gow ae a level

o pe-capia GDP. I ece yeas, umeous scolalysuies ave aalyze ese elaiosips i eail (e.g., e

Haa e al., 2006). Almos wiou excepio, ese su-ies ave ou a couies wi ige a impovig

ecoomic eeom gow moe apily a acieve igelevels o pe-capia GDP.

May o e elaiosips illusae i e gaps

below eec e impac o ecoomic eeom as i woksoug iceasig ecoomic gow. I oe cases, e

obseve elaiosips may eec e ac a some o

e vaiables a iuece ecoomic eeom may alsoiuece poliical acos like us, oesy i gove-me, a poecio o civil libeies. Tus, we ae o

ecessaily aguig a ee is a iec causal elaiobewee ecoomic eeom a e vaiables cosiee

below. I oe wos, ese gapics ae o subsiueo eal, scolaly ivesigaio a cools o oe

acos. Noeeless, we believe a e gaps poviesome isigs abou e coas bewee e aue acaaceisics o make-oiee ecoomies a ose

omiae by goveme egulaio a plaig. Ae vey leas, ese gues sugges poeial uiul aeas

o uue eseac.

Reerence

e Haa, Jakob, e al. (2006). Make-Oiee Isiuios

a Policies a Ecoomic Gow: A Ciical Suvey.

Journal o Economic Surveys 20, 2: 15735.

1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008

Tanzania . . . . . . . . . . . . . . .

Thailand . . . . . . . . . . . . . . .

Togo . . . . . . . . . . . . .

Trinidad & Tobago . . . . . . . . . . . . . .

Tunisia . . . . . . . . . . . . . . .

Turkey . . . . . . . . . . . . . . .

Uganda . . . . . . . . . . . . .

Ukraine . . . . . . . . . .

Unit. Arab Emirates . . . . . . . . . . . . .

United Kingdom . . . . . . . . . . . . . . .

United States . . . . . . . . . . . . . . .

Uruguay . . . . . . . . . . . . .

Venezuela . . . . . . . . . . . . . . .

Vietnam

Zambia . . . . . . . . . . . . . .

Zimbabwe . . . . . . . . . . . . .



27/258


Exhibit 1.6: Economic Freedom and Income per Capita

Countries with more economic reedom

have substantially higher per-capita

incomes.

Sources: Fraser Institute, Economic

Freedom of the World: 2010 Annual Report;

World Bank, World Development Indicators.

Exhibit 1.7: Economic Freedom and Economic Growth

The economies o countries with more

economic reedom tend to grow more

rapidly.




Exhibit 1.8: Economic Freedom and the Income Share o the Poorest 10%

The share o income earned by the poorest

10% o the population is unrelated to

economic reedom.




0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Most FreeSecondThirdLeast Free

EFW Index Quartiles

$3,858

$7,188

$14,659

$32,744

GDPpercapita,P

PP(2005

international$

),2008

0.0

0.5

1.0

1.5

2.0

2.5

3.0


EFW Index Quartiles

0.66%

2.49%

2.26%2.35%

Annualgrowth(%)ofGDP

percapita,19902008

0.0

0.5

1.0

1.5

2.0

2.5

3.0


EFW Index Quartiles

2.47%

2.19%2.27%

2.58%

Incomeshare(%)heldby

poorest10%,

19

902008


28/258


Exhibit 1.9: Economic Freedom and the Income Level o the Poorest 10%

The amount, as opposed to the share, o

income earned by the poorest 10% o the

popula tion is much higher in countries

with greater economic reedom.




Exhibit 1.10: Economic Freedom and Lie Expectancy

Lie expectancy is about 20 years longer

in countries with the most economic

reedom than in countries with the least.




Exhibit 1.11: Economic Freedom and Lie Satisaction

People living in countries with more

economic reedom report more lie

satisaction.

The Lie Satisaction Index is based on

survey responses to the question: All things

considered, how satised are you with

your lie as a whole these days? Responses

are made on a numeric scales rom 0 to 10,

where 0 is dissatised and 10 is satised.

Sources: Fraser Institute, Economic Freedom of

the World: 2010 Annual Report; New Economic

Foundation (2009), The (un)Happy Planet Index

2.0. Why Good Lives Dont Have to Cost the Earth.

0

2,000

4,000

6,000

8,000

10,000


EFW Index Quartiles

$910

$1,792

$3,334

$8,474

Averageincome(2005internationalPPP$)

earnedbypoorest

10%,2008

0

10

20

30

40

50

60

70

80

90


EFW Index Quartiles

59.9

67.872.3

79.3

Life

expectancyatbirth

(years),

2008

0

2

4

6

8

10


EFW Index Quartiles

4.7

5.96.3

7.5

Life

SatisfactionIn

dex,

2008


29/258


Exhibit 1.12: Economic Freedom and Corruption

With ewer regulations, taxes, and tarifs,

economic reedom reduces the degree o

corruption.

Note: CPI Score relates to perceptions

o the degree o corruption as seen by

business people and country analysts,

and ranges between 10 (highly clean) and

0 (highly corrupt).



Transparency International, Corruption

Perceptions Index 2009.

Exhibit 1.13: Economic Freedom and Political Rights and Civil Liberties

Political rights (e.g., ree and air elections)

and civil liberties (e.g., reedom o speech) go

hand in hand with economic reedom.

Note: Political rights and civil liberties

are measured on a scale rom 1 to 7, with

lowernumerical values indicating greater

political reedom and civil liberties.



Freedom House, Freedom in the World 2009.

0

2

4

6

8

10


EFW Index Quartiles

2.6

3.5

4.3

7.4

CorruptionP

erceptionsIndex

Score,

2008/2009

1

2

3

4

5

6

7


EFW Index Quartiles

4.3

3.4

2.3

1.6

PoliticalRights/CivilLiberties

Index,

2008


30/258



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cosise oug ime. I you ave poblems owloaig e aa, please coac Jea-Faois Miai via e-mailo o via elepoe +1.514.281.9550 ex. 306. I you ave ecical quesios abou e

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ile: 2010 Ecoomic Feeom Daase, publise iEconomic Freedom o the World: 2010 Annual ReportPublise: Fase Isiue

Yea: 2010URL:

Published work using research ratings rom Economic Freedom of the World

A selece lis o publise papes a ave use e ecoomic eeom aigs omEconomic Freedom o the Worldis available o lie a . I mos cases, a bie absac o e aicle is povie.

I you kow o ay oe papes cue o ocomig a soul be iclue o is page, o ave ue ioma-io abou ay o ese papes o auos, please wie o .
http://www.freetheworld.com/http://www.freetheworld.com/


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Chapter 2: Country Data Tables

Tis cape peses eaile aa o e compoes use i cosucig e EFW iex o e 141 couies i-clue i is suy. Fo eac couy, we pese e oveall EFW iex aig a e ak o a couy o e

yeas 1980, 1985, 1990, 1995, 2000, 2005, 2007, a 2008. Like all e aigs i e iex, ese ae values ou o 10; 10is e iges possible aig a zeo (0) is e lowes. A ige aig iicaes a geae egee o ecoomic eeom.

Te couy aa ables sow bo uajuse a cai-like aigs a aks. See Cape 1 o a ull ex-plaaio o e cai-lik meo. I e ows i e Cai-Like secio, iles i bol ace iicae e ve aeas

o ecoomic eeom a ae combie o geeae a oveall aig. Te cells o ei ig give e aig a, ipaeeses, e ak o a paicula aea o eac yea.

I e ows i e Uajuse secio, iles i bol ace iicae e ve aeas o ecoomic eeom a aecombie o geeae a oveall scoe. Te cells o ei ig give e aig o a aea o eac yea. Ueea eac

aea ile ae e iles o e compoes a sub-compoes a ae combie o geeae a aeas scoe. I eseows ae e scoes o eac yea pesee, wee aa ae available. Sow i ialic besie some scoes ae e acual

aa use o eive a paicula compoe aig. Te op ow ue e Uajuse secio sows e couyssummay aig o eac yea a, i paeeses, is oveall ak.

A moe complee escipio o eac compoe, icluig e meoology use o calculae e aigs, cabe ou i e Appeix: Explaaoy Noes a Daa Souces (p. 219).

Raigs ae available o may couies o 1970, 1975, 2001, 2002, 2003, 2004, a 2006, bu ese aa ae omi-e om e ables ue o limie space.


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22 Chapter 2: Country Data Tables

Albania

Chain-Linked Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank) Rating (Rank)

Summary Rating (Rank) . (99) . (100) . (84) . (47) . (32) . (27)

Area . Size o Government . (102) . (40) . (18) . (4) . (1) . (2)

Area . Legal Structure & Security o Property Rights . (54) . (57) . (97) . (85) . (70) . (70) . (56)

Area . Access to Sound Money . (94) . (91) . (105) . (71) . (9) . (25) . (26)

Area . Freedom to Trade Internationally . (97) . (112) . (106) . (91) . (85)

Area . Regulation o Credit, Labor and Business . (117) . (101) . (98) . (88) . (77) . (69)

UnadjustedSummary Rating (Rank) . (98) . (101) . (84) . (69) . (53) . (48)

Rating Data Rating Data Rating Data Rating Data Rating Data Rating Data Rating Data Rating Data

. Size o Government . . . . . .

A. Government consumption . . . . . . . . . . . . . . . .

B. Transers and subsidies . . . . . . . . . . . .

C. Government enterprises and investment . . . . . . . . . .

D. Top marginal tax rate . . .

(i) Top marginal income tax rate . . .

(ii) Top marginal income and payroll tax rates . . .

. Legal Structure and Security o Property Rights . . . . . . .

A. Judicial independence . . .

B. Impartial courts . . . . .

C. Protection o property rights . . .

D. Military intererence . . . . .

E. Integrity o the legal system . . . . .

F. Legal enorcement o contracts . . .

G. Regulatory restrictions o sale o real property . . .

. Access to Sound Money . . . . . . .

A. Money growth . . . . . . . . . .

B. Standard deviation o ination . . . . . . . . . . . . . .

C. Ination: most recent year . . . . . . . . . . . . . .

D. Freedom to own oreign currency . . . . . . . .

. Freedom to Trade Internationally . . . . .

A. Taxes on international trade . . . . .

(i) Revenues or trade taxes (% trade sector) . . . . . . . . . .

(ii) Mean tari rate . . . . . . . .

(iii) Standard deviation o tari rates . . . . . . . .

B. Regulatory trade barriers . . .

(i) Non-tari trade barriers . . .

(ii) Compliance cost o importing and exporting . . .

C. Size o trade sector . . . . . . . .

D. Black-market exchange rates . . . . . . . .

E. International capital market controls . . . . . . . .

(i) Foreign ownership/investment restrictions . . .

(ii) Capital controls . . . . . . . .

. Regulation o Credit, Labor and Business . . . . . .

A. Credit market regulations . . . . . .

(i) Ownership o banks . . . . . .

(ii) Foreign bank competition . . .

(iii) Private sector credit . . . . .

(iv) Interest rate controls/negative real int. rates . . . . . .

B. Labor market regulations . . .

(i) Hiring regulations and minimum wage . . .

(ii) Hiring and ring regulations . . .

(iii) Centralized collective bargaining . . .

(iv) Hours regulations . . .

(v) Mandated cost o worker dismissal . . .

(vi) Conscription . . . . . . . .

C. Business regulations . . .

(i) Price controls . . . . . .

(ii) Bureaucracy costs . . .

(iii) Bureaucracy costs . . .

(iv) Starting a business . . .

(v) Extra payments/bribes . . .

(vi) Licensing restrictions . . .

(vii) Cost o tax compliance . . .


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Algeria


Summary Rating (Rank) . (87) . (95) . (105) . (116) . (118) . (108) . (115) . (116)

Area . Size o Government . (64) . (95) . (73) . (36) . (80) . (107) . (116) . (123)

Area . Legal Structure & Security o Property Rights . (60) . (84) . (83) . (112) . (120) . (71) . (87) . (88)

Area . Access to Sound Money . (89) . (74) . (97) . (100) . (109) . (107) . (111) . (104)

Area . Freedom to Trade Internationally . (70) . (79) . (100) . (109) . (104) . (82) . (83) . (95)

Area . Regulation o Credit, Labor and Business . (110) . (122) . (122) . (114) . (115) . (115)

UnadjustedSummary Rating (Rank) . (83) . (92) . (106) . (117) . (118) . (126) . (132) . (132)


. Size o Government . . . . . . . .


B. Transers and subsidies . . . . . . . . . .

C . G ove rnm ent e nte rp ri se s a nd i nve stm ent . . . . . . . . . . . . . . . .

D. Top marginal tax rate

(i) Top marginal income tax rate

(ii) Top marginal income and payroll tax rates

. Legal Structure and Security o Property Rights . . . . . . . .








. Access to Sound Money . . . . . . . .

A. Money growth . . . . . . . . . . . . . . . .

B. Standard deviation o ination . . . . . . . . . . . . . . . .

C. Ination: most recent year . . . . . . . . . . . . . . . .


. Freedom to Trade Internationally . . . . . . . .

A. Taxes on international trade . . . . . . . .

(i) Revenues or trade taxes (% trade sector) . . . . . . . . . .

(ii) Mean tari rate . . . . . . . . . . . . . . . .

(iii) Standard deviation o tari rates . . . . . . . . . .







(i) Foreign ownership/investment restrictions . . .


. Regulation o Credit, Labor and Business . . . . . .

A. Credit market regulations . . . . . . . .

(i) Ownership o banks . . . . . . . .


(iii) Private sector credit . . . . . .

(iv) Interest rate controls/negative real int. rates . . . . .



(ii) Hiring and ring regulations . . .

(iii) Centralized collective bargaining . . .





(i) Price controls . . . . . .

(ii) Bureaucracy costs . . .

(iii) Bureaucracy costs . . .


(v) Extra payments/bribes . . .




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Angola


Summary Rating (Rank)

Area . Size o Government

Area . Legal Structure & Security o Property Rights

Area . Access to Sound Money

Area . Freedom to Trade Internationally

Area . Regulation o Credit, Labor and Business

UnadjustedSummary Rating (Rank) . (140) . (139) . (139)


. Size o Government . . .

A. Government consumption . . . . . .

B. Transers and subsidies

C. Government enterprises and investment . . . . . .

D. Top marginal tax rate

(i) Top marginal income tax rate

(ii) Top marginal income and payroll tax rates

. Legal Structure and Security o Property Rights . . .

A. Judicial independence . .

B. Impartial courts . . .

C. Protection o property rights . .

D. Military intererence . . .

E. Integrity o the legal system . . .



. Access to Sound Money . . .

A. Money growth . . . . . .

B. Standard deviation o ination . . . . . .

C. Ination: most recent year . . . . . .

D. Freedom to own oreign currency . . .

. Freedom to Trade Internationally . . .

A. Taxes on international trade . . .

(i) Revenues or trade taxes (% trade sector)

(ii) Mean tari rate . . . . . .

(iii) Standard deviation o tari rates . . . . . .


(i) Non-tari trade barriers . .


C. Size o trade sector . . .

D. Black-market exchange rates . . .

E. International capital market controls . . .

(i) Foreign ownership/investment restrictions . .

(ii) Capital controls . . .

. Regulation o Credit, Labor and Business . . .

A. Credit market regulations . . .

(i) Ownership o banks . . .


(iii) Private sector credit . . .

(iv) Interest rate controls/negative real int. rates . . .



(ii) Hiring and ring regulations . .

(iii) Centralized collective bargaining . .



(vi) Conscription . . .


(i) Price controls

(ii) Bureaucracy costs . .

(iii) Bureaucracy costs .


(v) Extra payments/bribes . .




35/258


Argentina


Summary Rating (Rank) . (85) . (97) . (91) . (35) . (32) . (97) . (87) . (94)

Area . Size o Government . (23) . (51) . (41) . (7) . (17) . (24) . (29) . (62)

Area . Legal Structure & Security o Property Rights . (53) . (61) . (37) . (62) . (68) . (92) . (96) . (96)

Area . Access to Sound Money . (104) . (106) . (109) . (63) . (5) . (114) . (88) . (89)

Area . Freedom to Trade Internationally . (73) . (91) . (89) . (43) . (83) . (91) . (82) . (81)

Area . Regulation o Credit, Labor and Business . (58) . (59) . (81) . (22) . (33) . (77) . (95) . (95)

UnadjustedSummary Rating (Rank) . (86) . (101) . (96) . (38) . (32) . (112) . (100) . (114)


. Size o Government . . . . . . . .


B. Transers and subsidies . . . . . . . . . . . . . . . .

C . G ove rnm ent e nte rp ri se s a nd i nve stm ent . . . . . . . . . . . . . . .

D. Top marginal tax rate . . . . . . . .

(i) Top marginal income tax rate . . . . . . . .

(ii) Top marginal income and payroll tax rates . . . - . . .

. Legal Structure and Security o Property Rights . . . . . . . .

A. Judicial independence . . . . .


C. Protection o property rights . . . . .





. Access to Sound Money . . . . . . . .

A. Money growth . . . . . . . . . -. . . . . . .

B. Standard deviation o ination . . . . . . . . . . . . . . . .

C. Ination: most recent year . . . . . . . . . -. . . . . . .


. Freedom to Trade Internationally . . . . . . . .

A. Taxes on international trade . . . . . . . .

( i) Revenu es or t rade t ax es (% tr ad e s ec tor) . . . . . . . . . . . . . . . .

(ii) Mean tari rate . . . . . . . . . . . . . . . .

(iii) Standard deviation o tari rates . . . . . . . . . . . .

B. Regulatory trade barriers . . . . .

(i) Non-tari trade barriers . . . . .

(ii) Compliance cost o importing and exporting . . . .




(i) Foreign ownership/investment restrictions . . . . .


. Regulation o Credit, Labor and Business . . . . . . . .

A. Credit market regulations . . . . . . . .

(i) Ownership o banks . . . . . . . .

(ii) Foreign bank competition . . . . .

(iii) Private sector credit . . . . . . . .

(iv) Interest rate controls/negative real int. rates . . . . . . . .

B. Labor market regulations . . . . . . . .

(i) Hiring regulations and minimum wage . . . . .

(ii) Hiring and ring regulations . . . . . .

(iii) Centralized collective bargaining . . . . . . . .

(iv) Hours regulations . . . . . . . .



C. Business regulations . . . . .

(i) Price controls . . . . .

(ii) Bureaucracy costs . . . .

(iii) Bureaucracy costs . . . . .

(iv) Starting a business . . . . .

(v) Extra payments/bribes . . . . .




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Armenia


Summary Rating (Rank)

Area . Size o Government

Area . Legal Structure & Security o Property Rights

Area . Access to Sound Money

Area . Freedom to Trade Internationally

Area . Regulation o Credit, Labor and Business

UnadjustedSummary Ratings (Rank) . (41) . (48) . (50)


. Size o Government . . .

A. Government consumption . (.) . (.) . (.)

B. Transers and subsidies . (.) . (.) . (.)

C. Government enterprises and investment . .

D. Top marginal tax rate . . .

(i) Top marginal income tax rate . . . ()

(ii) Top marginal income and payroll tax rates . . . ()

. Legal Structure and Security o Property Rights . . .


B. Impartial courts . . .


D. Military intererence . . .

E. Integrity o the legal system . . .



. Access to Sound Money . . .

A. Money growth . (.) . (.) . (.)

B. Standard deviation o ination . (.) . (.) . (.)

C. Ination: most recent year . (.) . (.) . (.)

D. Freedom to own oreign currency . . .

. Freedom to Trade Internationally . . .

A. Taxes on international trade . . .

(i) Revenues or trade taxes (% trade sector) . (.) . (.) . (.)

(ii) Mean tari rate . (.) . (.) . (.)

(iii) Standard deviation o tari rates . (.) . (.) . (.)



(ii) Compliance cost o im

econ free world 2010

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