NCPA - National Center for Policy Analysis


June 29, 2005

In their third edition of the annual report, "Economic Freedom of North America," the National Center for Policy Analysis (NCPA) and Canada's Fraser Institute confirm that economic freedom is a powerful driver of growth and prosperity and those provinces and states that have low levels of economic freedom continue to leave their citizens poorer than they need or should be.

Delaware remained at the top of the index for the third straight year and West Virginia ranked last, also for the third straight year. The index ranks states on a scale of 1 to 10 (highest) and each one-point increase tends to produce about $4,500 more in per capita income (gross domestic product). While economic freedom is not the sole determinant of a state's wealth, the correlation is strong.

  • Compared to the average (median) state, Delaware enjoys $6,772 more income (GDP) because of its higher level of economic freedom.
  • By contrast, West Virginia has $8,126 less income because of its lower level of economic freedom.
  • The 10 highest ranking red states enjoyed $3,837 in extra per capita income, while the 10 lowest ranking blue states lose $3,205 per person relative to the average state.

This year's rankings represent a marked improvement for North Dakota, which jumped to 27th from 34th, and Maryland, which improved to 16th from 21st. But Oklahoma fell 7 places to 36th and Illinois fell from 15th to 21st.

While economic freedom in Canada stayed the same on average in the 2005 report, rankings for most of the provinces improved relative to the United States. In the 2004 report, only 4 of the 10 Canadian provinces ranked higher than West Virginia; in the 2005 report, only 4 ranked lower.

Source: Amela Karabegovic and Fred McMahon, "Economic Freedom of North America: 2005 Annual Report," Fraser Institute and National Center for Policy Analysis, June 29, 2005.

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