ECONOMIC FREEDOM INDEX

ECONOMIC FREEDOM INDEX

SUBMITTED BY:

RAM MOHAN U(22/023)

RISHABH JAIN(22/025)

ASAD RAZA KHAN(22/071)

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INTRODUCTION

Since 1995, the Heritage Foundation and the Wall Street Journal have annually reported the Economic Freedom Index

Officially, it is defined as the absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself

In other words, people are free to work, produce, consume, and invest in the ways they feel are most productive

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This index estimates the extent to which the government of a country intervenes with the principles of free choice and free enterprise for reasons that go beyond the basic need to protect property, liberty, citizen safety, and market efficiency.

Practically, this survey rates countries in terms of 50 independent indicators that are organized into the 10 dimensions

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DIMENSIONS OF ECONOMIC FREEDOM INDEX

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RULE OF LAW

PROPERTY RIGHTS

An assessment of the ability of individuals to accumulate private property secured by clear laws that are fully enforced by the state

FREEDOM FROM CORRUPTION

The application of quantitative data that assess the perception of corruption in the business environment, including levels of government, legal, judicial, and administrative corruption

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REGULATORY EFFICIENCY

BUSINESS FREEDOM

The ability to create, operate, and close an enterprise quickly and easily. Burdensome, redundant regulatory rules are the most harmful barriers to business freedom

MONETARY FREEDOM

Combination measure of price stability and assessment of price controls. Both inflation and price controls distort market activity. Price stability without micro-economic intervention is the ideal state for the free market

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LABOR FREEDOM

A composite measure of the ability of workers and businesses to interact without restriction by the state

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GOVERNMENT SIZE

FISCAL FREEDOM

A measure of the burden of government from the revenue side. It includes both the tax burden in terms of the top tax rate on income(individual and corporate separately) and the overall amount of tax revenue as a portion of GDP

FREEDOM FROM GOVERNMENT

Assessment of all government expenditures-including consumption and transfers and state-owned enterprises. Ideally, the state will provide only true public goods, with an absolute minimum of expenditure

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OPEN MARKETS

INVESTMENT FREEDOM

An assessment of the free flow of capital, especially foreign capital

FINANCIAL FREEDOM

A measure of banking security as well as independence from government control. State ownership of banks and other financial institutions, such as insurer and capital markets, is an inefficient burden, and political favoritism has no place in a free-capital market

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TRADE FREEDOM

A composite measure of the absence of tariff and non-tariff barriers that affects imports and exports of goods and services

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GLOBAL DISTRIBUTION OF ECONOMIC FREEDOM

Scores(%)CategoryNumber of countries80-100Free770-79.9Mostly free2360-69.9Moderately free4850-59.9Mostly unfree590-49.9Repressed 20

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