Pakistan performs badly on the scale of economic freedom Its rank lowered from 104 to 110
Far behind from India’s rank at 86 and Sri Lanka’s at 105,
Bangladesh at 115 Integrity of legal structures and security of property rights decline Hong Kong and Singapore rated best for economic freedom,
Myanmar and Zimbabwe ranked worst Economic freedom may decline in the short term in response to recession, but over a longer time, economic freedom has a tendency to increase after a banking crisis
Lahore September 14, 2009: The report ranks Hong Kong number one, followed by Singapore then New Zealand. Zimbabwe once again has the lowest level of economic freedom followed by Myanmar and Angola, according to the Economic Freedom of the World: 2009 Annual Report, released today in Pakistan by the Alternate Solutions Institute, Pakistan’s first free market think tank.
This year’s report also includes new research that examines the likely impact of the global recession on levels of economic freedom. It suggests that economic freedom may decline in the short term in response to crises, but over a longer time, economic freedom has a tendency to increase after a banking crisis.
Pakistan ranked 110 out of 141 countries this year, after ranking 104 (out of 141 countries) in the last year’s report. In 2008 Report Pakistan scored 6.05 points out of 10; while this year its overall scored fell to 6.01. The areas that caused a decline in Pakistan’s overall performance are: legal structure and security of property rights; access to sound money; and freedom to trade internationally. The areas in which Pakistan slightly improved are: size of government where its score changed from 7.01 to 7.1; and regulation of credit, labor, and business where its overall scored improved to 6.6 from 6.56.
Pakistan scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):
• Size of government: changed to 7.1 from 7.01 in the last year’s report • Legal structures and security of property rights: changed to 4.2 from 4.31
• Access to sound money: changed to 6.3 from 6.45 • Freedom to trade internationally: changed to 5.8 from 5.91
• Regulation of credit, labour and business: changed to 6.6 from 6.56
“Economic freedom is vitally important to building prosperity and reducing poverty so the finding that it may increase in the long run following a financial crisis is good news,” said Dr. Khalil Ahmad Executive Director of Alternate Solutions Institute.
The annual peer-reviewed Economic Freedom of the World report is produced by the Fraser Institute, Canada ’s leading economic think tank, in cooperation with independent institutes in 75 nations including the Alternate Solutions Institute in Pakistan.
The Economic Freedom of the World report uses 42 different measures to create an index ranking countries around the world based on policies that encourage economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property. Economic freedom is measured in five different 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, labor and business.
Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and longer life spans. This year’s report also contains new research showing the impact of the global recession on levels of economic freedom.
“Economic freedom is the key building block of the most prosperous nations around the world. Countries with high levels of economic freedom are those in which people enjoy high standards of living and personal freedoms. Countries at the bottom of the index face the opposite situation; their citizens are often mired in poverty, are governed by totalitarian regimes and have few if any, individual rights or freedoms,” said Dr. Khalil Ahmad Executive Director of the Institute.
The full report is available at http://www.freetheworld.com
Economic Freedom and the Global Recession
The 2009 edition of the Economic Freedom of the World report includes new research that examines the likely impact of the global recession on levels of economic freedom.
The study looked at banking crises that took place in Norway and Sweden during the 1990s and found that although economic freedom may decline in the short term in response to crises, over a longer time, economic freedom has a tendency to increase after a banking crisis. In the case of Norway and Sweden, the banking crisis did not distract these countries from continuing with their market-based reform policies.
“Even though a banking crisis can be very painful, it is an illusion that they can be fully ruled out by better government regulation. In fact, a case can be made that perverse regulations in combination with the creation of too much liquidity played a key role in the creation of the current crisis,” said Fred McMahon, director of the Centre for Globalization Studies at the Fraser Institute.
“The short-term response of governments will almost surely reduce economic freedom but history shows that this need not be the case over the long term. Several countries that have experienced financial crises have moved toward greater economic freedom in subsequent years. The impact on economic freedom depends on what we learn from the crisis. Will we move toward institutions and policies more consistent with economic freedom? Or will we politicize, micromanage, and expand the size and role of government? If we choose to follow the latter route, our destiny will be like the generation of 1930; we will face a lost decade of stagnation and decline.”
About the Economic Freedom Index
Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. This year’s publication ranks 141 nations representing 95% of the world’s population for 2007, the most recent year for which data are available. The report also updates data in earlier reports in instances where data have been revised.