Index of Economic Freedom: Difference between revisions
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An investment advisory group has created the "World Freedom ETFfolio" which bases its investments on the Index by favoring countries with higher levels of freedom.<ref>{{cite news | url = http://www.prweb.com/releases/2008/1/prweb655974.htm | title = Chartwell Launches World Freedom ETFfolio Based on Index of Economic Freedom| work = PRWeb |date= [[2008-01-29]] | accessdate = 2008-02-04 }}</ref> |
An investment advisory group has created the "World Freedom ETFfolio" which bases its investments on the Index by favoring countries with higher levels of freedom.<ref>{{cite news | url = http://www.prweb.com/releases/2008/1/prweb655974.htm | title = Chartwell Launches World Freedom ETFfolio Based on Index of Economic Freedom| work = PRWeb |date= [[2008-01-29]] | accessdate = 2008-02-04 }}</ref> |
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Some have questioned the Indexs position on Economic Freedom, even saying that the Heritage Foundations stand is a debasement of [[Franklin Delano Roosevelts]] [[Four Freedoms]], replacing the "Freedom from want" with an individual economic freedom.<ref>{{cite news |author= Robert Weissman| url = http://www.counterpunch.org/weissman01252008.html | title = Translating the Heritage Foundation: |
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Reclaiming Economic Freedom| work = Counterpunch |date= [[2008-01-25]] | accessdate = 2008-02-04 }}</ref> |
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| ⚫ | Some have also questioned its methodology such as the country of [[Qatar]] questioned the rating of their countries economic freedom in 2008, comparing its middling rating with the high rating they had received from other indicators such as [[Transparency International]] and [[Moody's]]. They also noted that the methodology had changed twice in the last two years, rendering its report "unreliable".<ref>{{cite news | url = http://www.bi-me.com/main.php?id=16985&t=1&c=33&cg=4 | title = UAE challenges its economic freedom ranking in paper by Heritage Foundation| work = Business Intelligence Middle East|date= [[2008-01-31]] | accessdate = 2008-01-31 }}</ref> |
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== Current ratings ==<!-- This section is linked from [[Latvia]] --> |
== Current ratings ==<!-- This section is linked from [[Latvia]] --> |
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Revision as of 14:42, 4 February 2008
The Index of Economic Freedom is a series of 10 economic measurements created by the Wall Street Journal and The Heritage Foundation to measure the degree of economic freedom in the world's nations.
History
The Heritage Foundation and the Wall Street Journal created the Index of Economic Freedom. Both the Wall Street Journal and Heritage Foundation are known for their support of market liberalism.
Methodology
"The highest form of economic freedom provides an absolute right of property ownership, fully realized freedoms of movement for labor, capital, and goods, and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself. In other words, individuals are free to work, produce, consume, and invest in any way they please, and that freedom is both protected by the state and unconstrained by the state.". However, the labour freedom calculation does not take into account the freedom to migrate across countries.
The index scores nations on 10 broad factors of economic freedom using statistics from organizations like the World Bank, the IMF and the Economist Intelligence Unit:
- Business Freedom
- Trade Freedom
- Monetary Freedom
- Freedom from Government
- Fiscal Freedom
- Property Rights
- Investment Freedom
- Financial Freedom
- Freedom from Corruption
- Labor Freedom
The 10 factors are averaged equally into a total score. Each one of the 10 freedoms is graded using a scale from 0 to 100, where 100 represents the maximum freedom. A score of 100 signifies an economic environment or set of policies that is most conducive to economic freedom.
Research
The Heritage Foundations studies have found that the top 20% on the index have twice the per capita income of this in the second quintile, and five times that of the bottom 20%.[1]
Influence and trends
The above has had "at least some indirect effects" on economic policy in some nations. In Russia it influenced President Vladimir Putin, after he won the 2000 election, to adopt a flat tax and restructure the very high marginal payroll taxes that were causing massive tax evasion. Supporters argue that this has contributed to the strong economic growth in Russia in recent years. On the other hand, Russia still scores very low in both indices and the high oil prices have helped Russia's economy. Flat taxes have also been instituted in Latvia, Estonia, and Slovakia, and are discussed in several other nations. Iceland has cut several of its taxes, with advocates for this using the economic freedom model. A related index for Chinese provinces is followed by both Chinese scholars and policy makers. There is also a network of institutions in 59 different nations that use the index to promote free market ideas.
Criticical reaction
An investment advisory group has created the "World Freedom ETFfolio" which bases its investments on the Index by favoring countries with higher levels of freedom.[2]
Some have questioned the Indexs position on Economic Freedom, even saying that the Heritage Foundations stand is a debasement of Franklin Delano Roosevelts Four Freedoms, replacing the "Freedom from want" with an individual economic freedom.[3]
Some have also questioned its methodology such as the country of Qatar questioned the rating of their countries economic freedom in 2008, comparing its middling rating with the high rating they had received from other indicators such as Transparency International and Moody's. They also noted that the methodology had changed twice in the last two years, rendering its report "unreliable".[4]
Current ratings
Since 1995, world Economic Freedom has increased 2.6 points using the 2008 index methodology.[5] There was a slight increase in economic freedom in 2008, with the largest positive change in Egypt, which jumped to 85th in the world.[6]
See Also
References
- ^ Mary Anastasia O'Grady (2008-01-15). "The Real Key to Development". Wall Street Journal. Retrieved 2008-02-04.
{{cite news}}: Check date values in:|date=(help) - ^ "Chartwell Launches World Freedom ETFfolio Based on Index of Economic Freedom". PRWeb. 2008-01-29. Retrieved 2008-02-04.
{{cite news}}: Check date values in:|date=(help) - ^ Robert Weissman (2008-01-25). "Translating the Heritage Foundation: Reclaiming Economic Freedom". Counterpunch. Retrieved 2008-02-04.
{{cite news}}: Check date values in:|date=(help); line feed character in|title=at position 37 (help) - ^ "UAE challenges its economic freedom ranking in paper by Heritage Foundation". Business Intelligence Middle East. 2008-01-31. Retrieved 2008-01-31.
{{cite news}}: Check date values in:|date=(help) - ^ Barry Wood (2008-01-15). "Economic Freedom Holding Steady, 14th Index of Economic Freedom Shows". PR Newswire. Retrieved 2008-02-04.
{{cite news}}: Check date values in:|date=(help) - ^ Barry Wood (2008-01-16). "Economic Freedom Index Shows Some Improvements". Voice of America. Retrieved 2008-02-04.
{{cite news}}: Check date values in:|date=(help)