NCPA - National Center for Policy Analysis

Economic Freedom of the World: United States Not in Top 10

September 19, 2012

The Fraser Institute's Economic Freedom of the World 2012 index measures the degree to which the policies and institutions of countries are supportive of economic freedom. Forty-two variables are used to construct a summary index and to measure the degree of economic freedom in five broad areas: (1) size of government; (2) legal system and property rights; (3) sound money; (4) freedom to trade internationally; and (5) regulation.

  • In this year's index, Hong Kong retains the highest rating for economic freedom, 8.90 out of 10.
  • The other top 10 nations are: Singapore, 8.69; New Zealand, 8.36; Switzerland, 8.24; Australia, 7.97; Canada, 7.97; Bahrain, 7.94; Mauritius, 7.90; Finland, 7.88; and Chile, 7.84.
  • The rankings (and scores) of other large economies in this year's index are the United Kingdom, 12th (7.75); the United States, 18th (7.69); Japan, 20th (7.64); Germany, 31st (7.52); France, 47th (7.32); Italy, 83rd (6.77); Mexico, 91st, (6.66); Russia, 95th (6.56); Brazil, 105th (6.37); China, 107th (6.35); and India, 111th (6.26).
  • The scores of the bottom 10 nations in this year's index are: Venezuela, 4.07; Myanmar, 4.29; Zimbabwe, 4.35; Republic of the Congo, 4.86; Angola, 5.12; Democratic Republic of the Congo, 5.18; Guinea-Bissau, 5.23; Algeria, 5.34; Chad, 5.41; and, tied for 10th worst, Mozambique and Burundi, 5.45.

The United States has experienced a substantial decline in economic freedom during the past decade.

  • From 1980 to 2000, the United States was generally rated the third freest economy in the world, ranking behind only Hong Kong and Singapore.
  • After increasing steadily during the period from 1980 to 2000, the rating of the United States fell from 8.65 in 2000 to 8.21 in 2005 and 7.70 in 2010.
  • The ranking of the United States has fallen precipitously from second in 2000 to eighth in 2005 and 19th in 2010 (unadjusted ranking of 18th).

Nations that are economically free out-perform non-free nations in indicators of well-being:

  • Nations in the top quartile of economic freedom had an average per-capita gross domestic product of $37,691 in 2010, compared to $5,188 for bottom quartile nations.
  • In the top quartile, the average income of the poorest 10 percent was $11,382, compared to $1,209 in the bottom in 2010 current international dollars.
  • Life expectancy is 79.5 years in the top quartile compared to 61.6 years in the bottom quartile.

Source: James Gwartney, Joshua Hall and Robert Lawson, "Economic Freedom of the World: 2012 Annual Report," Fraser Institute, September 18, 2012.


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