H I g h L i g h t s o f t h e terry Miller
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H I G H L I G H T S O F T H E Terry Miller Anthony B. Kim James M. Roberts with Patrick Tyrrell
80–100 Free 70–79.9 Mostly Free 60–69.9 Moderately Free 50–59.9 Mostly Unfree 0–49.9 Repressed ● ● ● ● ● Economic Freedom Scores Rank Country Overall Score Rank Country Overall Score Rank Country Overall Score
1 Singapore 89.4 2 Hong Kong 89.1 3 New Zealand 84.1 4 Australia 82.6 5 Switzerland 82.0 6 Ireland 80.9 7 United Kingdom 79.3 8 Denmark 78.3 9 Canada 78.2 10 Estonia 77.7 11 Taiwan 77.1 12 Georgia 77.1 13 Iceland 77.1 14 Netherlands 77.0 15 Chile 76.8 16 Lithuania 76.7 17 United States 76.6 18 United Arab Emirates 76.2 19 Luxembourg 75.8 20 Finland 75.7 21 Mauritius 74.9 22 Sweden 74.9 23 Czech Republic 74.8 24 Malaysia 74.7 25 Korea, South 74.0 26 Israel 74.0 27 Germany 73.5 28 Norway 73.4 29 Austria 73.3 30 Japan 73.3 31 Qatar 72.3 32 Latvia 71.9 33 Rwanda 70.9 34 Armenia 70.6 35 Macau 70.3 36 Bulgaria 70.2 37 Cyprus 70.1 38 Romania 69.7 39 Kazakhstan 69.6 40 Botswana 69.6 41 North Macedonia 69.5 42 Malta 69.5 43 Thailand 69.4 44 Azerbaijan 69.3 45 Colombia 69.2 46 Poland 69.1 47 Uruguay 69.1 48 Belgium 68.9 49 Jamaica 68.5 50 Saint Lucia 68.2 51 Peru 67.9 52 Slovenia 67.8 53 Kosovo 67.4 54 Indonesia 67.2 55 Panama 67.2 56 Portugal 67.0 57 Albania 66.9 58 Spain 66.9 59 St. Vincent & Grenadines 66.8 60 Slovakia 66.8
61 Brunei Darussalam 66.6
62 Hungary 66.4
63 Bahrain 66.3
64 France 66.0
65 Serbia 66.0
66 Jordan 66.0
67 Mexico 66.0
68 Costa Rica 65.8
69 Bahamas 64.5
70 Philippines 64.5
71 Turkey 64.4
72 Seychelles 64.3
73 Guatemala 64.0
74 Italy 63.8
75 Oman 63.6
76 Cabo Verde 63.6
77 Fiji 63.4
78 Morocco 63.3
79 Kuwait 63.2
80 Paraguay 63.0
81 Kyrgyz Republic 62.9
82 Bosnia and Herzegovina 62.6 83 Saudi Arabia 62.4 84 Croatia 62.2 85 Bhutan 62.1 86 Samoa 62.1 87 Moldova 62.0 88 Belarus 61.7 89 Tanzania 61.7 90 El Salvador 61.6 91 Montenegro 61.5 92 Barbados 61.4 93 Honduras 61.1 94 Russia 61.0 95 Dominican Republic 60.9 96 Namibia 60.9 97 Dominica 60.8 98 Vanuatu 60.7 99 Madagascar 60.5 100 Greece 59.9 101 Côte d'Ivoire 59.7 102 Uganda 59.5 103 China 59.5 104 Ghana 59.4 105 Vietnam 58.8 106 South Africa 58.8 107 Tonga 58.8 108 Papua New Guinea 58.4 109 Trinidad and Tobago 58.3 110 Senegal 58.0 111 Belize 57.4 112 Sri Lanka 57.4 113 Cambodia 57.3 114 Uzbekistan 57.2 115 Nicaragua 57.2 116 Nigeria 57.2 117 Burkina Faso 56.7 118 Gabon 56.7 119 Maldives 56.5 120 India 56.5 121 Guinea 56.5 122 Bangladesh 56.4 123 Gambia 56.3 124 Guyana 56.2 125 São Tomé and Príncipe 56.2 126 Mali 55.9 127 Mongolia 55.9 128 Tunisia 55.8 129 Laos 55.5 130 Mauritania 55.3 131 Eswatini 55.3 132 Kenya 55.3 133 Benin 55.2 134 Ukraine 54.9 135 Pakistan 54.8 136 Afghanistan 54.7 137 Niger 54.7 138 Lesotho 54.5 139 Nepal 54.2 140 Togo 54.1 141 Burma 54.0 142 Egypt 54.0 143 Comoros 53.7 144 Brazil 53.7 145 Cameroon 53.6 146 Ethiopia 53.6 147 Zambia 53.5 148 Guinea-Bissau 53.3 149 Argentina 53.1 150 Solomon Islands 52.9 151 Djibouti 52.9 152 Malawi 52.8 153 Haiti 52.3 154 Angola 52.2 155 Tajikistan 52.2 156 Micronesia 52.0 157 Lebanon 51.7 158 Ecuador 51.3 159 Central African Republic 50.7 160 Mozambique 50.5
161 Chad 50.2
162 Congo, Dem. Rep. 49.5
163 Suriname 49.5
164 Iran 49.2
165 Liberia 49.0
166 Burundi 49.0
167 Equatorial Guinea 48.3
168 Sierra Leone 48.0
169 Algeria 46.9
170 Turkmenistan 46.5
171 Timor-Leste 45.9
172 Kiribati 45.2
173 Sudan 45.0
174 Zimbabwe 43.1
175 Bolivia 42.8
176 Congo, Rep. 41.8
177 Eritrea 38.5
178 Cuba 26.9
179 Venezuela 25.2
180 Korea, North 4.2
1 The Heritage Foundation | heritage.org/Index KEY FINDINGS OF THE 2020 INDEX T he results of the 2020 Index of Economic Freedom confirm yet again the importance of economic freedom in promoting rapid growth and sustainable social progress. • Citizens of “free” or “mostly free” countries enjoy incomes that are more than double the global average and more than five times higher than in “repressed” economies. • The link between improve- ments in economic freedom and economic growth is robust; expanded economic freedom has contributed to a doubling of world GDP in the years since the
• People in economically free societies live longer, enjoy better health and higher quality “social goods” such as education, and have the resources to become better stewards of the environment. • Greater economic freedom also correlates with more effective democratic governance and stronger rule of law. The 2020 global average economic freedom score is 61.6, the highest ever recorded in the 26-year history of the Index. Of the 180 economies ranked in the
ately free.” At the other end of the spectrum, 81 economies received scores below 60 and are rated “mostly unfree” or “repressed.” The increase in global economic freedom in 2020 was driven by increases in economic freedom that were registered by 124 of the 180 economies graded. By contrast, scores declined in 50 countries and were unchanged in six countries. Singapore Singapore New Zealand Switzerland Australia Ireland SIX “FREE” ECONOMIES
AMERICAS
Canada EUROPE
Switzerland MIDDLE EAST/ NORTH AFRICA ASIA-PACIFIC United Arab Emirates SUB-SAHARAN AFRICA
REGIONAL LEADERS
Average Annual Growth of GDP per Capita (PPP)
■
Countries Gaining Economic Freedom ■
Countries Losing Economic Freedom 2.7% 1.7% 2.8% 1.9% 2.2% 1.2% 2 2020 Index of Economic Freedom HIGHLIGHTS THE 12 ECONOMIC FREEDOMS: A GLOBAL LOOK heritage.org RULE OF LAW GOVERNMENT SIZE REGULATORY EFFICIENCY OPEN MARKETS Property Rights Judicial Effectiveness Government Integrity Tax
Burden Government Spending Fiscal
Health Business Freedom Labor
Freedom Monetary Freedom Trade
Freedom Investment Freedom Financial Freedom 80 60 70 100
50 0
66.2 77.3 80 60 70 100
50 0
45.8 57.3 80 60 70 100
50 0
57.7 73.9 80 60 70 100
50 0
59.6 63.8 Several governments made progress in enhancing judicial effectiveness by increasing institutional independence and accountability, and the worldwide average score for judicial effectiveness increased accordingly. Global scores for property rights and government integrity also improved markedly in the 2020 Index. However, the low average scores for the three rule-of-law indicators reflect persistent problems in the protection of private property as well as the systemic corruption of government institutions in many countries by such practices as bribery, cronyism, and graft. The average top individual income tax rate for all countries in the 2020 Index is about 28.5 percent, and the average top corporate tax rate is 23.9 percent. The average overall tax burden as a percentage of GDP corresponds to approximately 21.9 percent. The average level of government spending as a percentage of GDP is equal to 32.1 percent. The average level of gross public debt for countries covered in this year’s Index is equivalent to about 56.7 percent of GDP. Many economies have continued to streamline and modernize their business frameworks, and the overall pace of reform in developing countries has often exceeded the pace in developed countries. Nevertheless, the global score for business freedom declined in the 2020 Index, reflecting the ongoing temptation among governments to try to micromanage business decision-making to achieve politically motivated goals. Monetary freedom also decreased slightly, reflecting a somewhat greater tendency by governments to influence prices. The global score for labor freedom this year was the same as the score in the 2019 Index. Global trade freedom suffered a setback in this year’s Index, and the worldwide average of countries’ trade-weighted applied tariff rates rose from 5.9 percent to 6.1 percent. Investment freedom remained virtually unchanged, and investment policy measures in many countries remain geared to the promotion of sectoral investment rather than to general market openness. The global score for financial freedom increased slightly, but substantial and repressive government involvement in the sector continues in many countries. 3 The Heritage Foundation | heritage.org/Index $0 0 10 20 30 40 50 60 70 80 90 100 $20,000
$40,000 $60,000
$80,000 $100,000
$120,000 $140,000
AS ECONOMIC FREEDOM RISES, THE GLOBAL ECONOMY EXPANDS AND POVERTY FALLS ECONOMIC FREEDOM AND THE STANDARD OF LIVING Average Score in the Index of Economic Freedom heritage.org SOURCES: 2020 Index of Economic Freedom and The World Bank. heritage.org SOURCES: 2020 Index of Economic Freedom and IMF. Global GDP, in Trillions of 2010 U.S. Dollars Percentage of Global Population in Poverty GDP per
Capita (PPP)
2020 Index of Economic Freedom Score Average GDP per Capita (PPP), by Economic Freedom Category FREE MOSTLY FREE MODERATELY FREE MOSTLY UNFREE REPRESSED $66,751
$48,535 $22,446
$7,286 $7,615
$0 $20
$40 $60
$80 $100
2018 1992
0% 10%
20% 30%
40% 2015
1993 34%
$39.2 $82.6
56 58
60 62
2020 1995
57.6 61.6
10.0% Tr en d Correlation: 0.63 Each circle represents a nation in the Index of Economic Freedom 4 2020 Index of Economic Freedom HIGHLIGHTS The Americas region covers more than one-quarter of the globe’s landmass and is one of its most economically diverse regions. With a population of just under 1 billion, it has the world’s second-highest population-weighted average per capita income ($32,570), but its economies have expanded at an average annual rate of just 1.3 percent over the past five years. The regional average rate of unemploy- ment dropped to 6.5 percent, but the regional average rate of inflation (excluding Venezuela) rose to 4.7 percent. The region’s average level of public debt, already the highest in the world, climbed to 81.5 percent of GDP in the past year. The slight improvement in the region’s overall average economic freedom score in the 2020 Index reflects somewhat higher scores for property rights and government integrity indicators, but is still below the global average. The foun- dations of a well-functioning free market remain shallow, with widespread cor- ruption and still-weak protection of property rights aggravating such systemic shortcomings as regulatory inefficiency and monetary instability. Regional progress toward market-based democracy and away from authoritar- ian cronyism received boosts and suffered setbacks. Brazil’s center-right govern- ment scored successes in its reform program, but prospects for further reforms in Argentina dimmed when the left-wing populist Peronist Party regained power. Notable Countries • This year, the Americas region country with the largest overall score increase was Ecuador, where President Lenín Moreno rejected the Chavista policies of his predecessor in favor of market-friendly and pro-Western policies. THE AMERICAS: SUMMARY 32 COUNTRIES Average GDP per Capita, by Economic Freedom Category Number of Countries in Each Economic Freedom Category FREE
MOSTLY FREE MODERATELY FREE MOSTLY UNFREE REPRESSED n/a $46,078
$15,733 $13,154
$11,283 REPRESSED: 4 MOSTLY
UNFREE: 8 MODERATELY FREE: 17 MOSTLY FREE: 3 5 The Heritage Foundation | heritage.org/Index • The tragic situation in nearly bankrupt Venezuela, which had the world’s second-lowest Index score in 2020, continued to deteriorate. THE AMERICAS: COUNTRIES Canada
United States Brazil
Argentina Colombia
Venezuela Guyana
Suriname Jamaica
Nicaragua Cuba
Belize Haiti
Bolivia Mexico
Guatemala El Salvador Honduras Costa Rica Panama Dominican Republic ■ Bahamas
■ St. Vincent and the Grenadines ■ Dominica ■ Barbados ■ Saint Lucia ■ Trinidad and Tobago Ecuador Peru
Uruguay Paraguay
Chile 80–100 Free 70–79.9 Mostly Free 60–69.9 Moderately Free 50–59.9 Mostly Unfree 0–49.9 Repressed Not Graded ● ● ● ● ● ● Economic Freedom Scores Note: Economic indicators are population- weighted averages. Total population: 999 million GDP per capita (PPP): $32,570 Infl ation: 4.7% (excluding Venezuela)
81.5% of GDP 1–year growth: 1.5%
5–year growth: 1.3%
BY THE NUMBERS 6 2020 Index of Economic Freedom HIGHLIGHTS The Asia–Pacific region has over half of the world’s population and spans its largest surface area. China alone accounts for a little more than one-third of the region’s total population, and India accounts for nearly another third. The region has continued to lead worldwide economic growth, expanding by an aver- age annual rate of about 6.3 percent over the past five years. It has the world’s lowest average unemployment rate (3.4 percent) and lowest average inflation rate (3.1 percent), but it also has the second-lowest population-weighted GDP per capita ($14,050) among the Index’s five global regions. Although its overall economic freedom score of 61.1 is just below the world average in the 2020 Index, the Asia–Pacific scored equal to or better than the world averages in seven of the 12 economic freedom indicators: property rights, judicial effectiveness, tax burden, government spending, fiscal health, business freedom, and labor freedom. The region lagged behind world averages, how- ever, in other critical areas of economic freedom such as government integrity, monetary freedom, trade freedom, investment freedom, and financial freedom, Notable Countries •
led by a higher business freedom score. Although it still languishes in the mid-range of the “mostly unfree” category, it has benefitted from several recent waves of economic liberalization.
Average GDP per Capita, by Economic Freedom Category Number of Countries in Each Economic Freedom Category FREE
MOSTLY FREE MODERATELY FREE MOSTLY UNFREE REPRESSED $64,267 $57,254
$18,109 $7,493
$12,385 REPRESSED: 4 MOSTLY
UNFREE: 19 MODERATELY FREE: 10 FREE: 4 MOSTLY FREE: 5
7 The Heritage Foundation | heritage.org/Index • Significant improvements in scores for fiscal health, investment freedom, and financial freedom drove Vietnam’s economic freedom ranking and score higher in the 2020 Index for the third year in a row. •
its overall score increased slightly. Ongoing tensions in the U.S.–China economic relationship and worldwide pushback against China’s debt-trap diplomacy have heightened business uncertainties. ASIA-PACIFIC: COUNTRIES Kazakhstan Australia New
Zealand Papua New Guinea Indonesia Philippines Malaysia Singapore ■ Nepal
Bangladesh Bhutan
Burma ■ Brunei Laos Cambodia
Vietnam Micronesia ■ Kiribati ■ Solomon Islands ■ Vanuatu
■ Fiji
■ Samoa
■ Tonga
■ Thailand
Taiwan ■ Hong Kong Sri Lanka Maldives ■
Macau Timor-Leste Turkmenistan Uzbekistan Tajikistan Kyrgyz Republic Mongolia North
Korea South
Korea Japan
China India
Pakistan Afghanistan 80–100 Free 70–79.9 Mostly Free 60–69.9 Moderately Free 50–59.9 Mostly Unfree 0–49.9 Repressed Not Graded ● ●
● ● ● Economic Freedom Scores Note: Economic indicators are population-weighted averages. Total population: 4.18 billion GDP per capita (PPP): $14,050 Infl ation: 3.1% Unemployment rate: 3.4% Public debt: 59.9% of GDP 1–year growth: 6.1%
5–year growth: 6.3%
BY THE NUMBERS 8 2020 Index of Economic Freedom HIGHLIGHTS Concepts of free markets and individual liberty first took root in Europe, but so did the collectivist philosophies of Communism and Socialism. That tension remains in the region’s economic policy mix. Nevertheless, more than half of the world’s 37 freest countries (overall scores above 70) are in Europe, thanks in large part to relatively extensive and long-established free-market institutions, robust rule of law, and exceptionally strong investment freedom. However, Europe still struggles with a variety of policy barriers to vigorous economic expansion, such as overly protective and costly labor regulations, high tax burdens, various market-distorting subsidies, and continuing problems in public finance caused by years of public-sector expansion. The result has been stagnant economic growth, which has exacerbated the burden of fiscal deficits and mounting debt in a number of countries in the region. The region’s average GDP per capita ($36,453) is the highest in the world, and inflation (4.0 percent) is generally under control. However, the Eu- ropean continent is still plagued by high unemployment (7.3 percent) and heavy, although slightly declining, levels of public debt (60.8 percent of GDP on average). Notable Countries • Economic freedom in the United Kingdom increased again in the 2020 Index, reflecting the U.K.’s extraordinarily efficient business and investment environments. The country is well-positioned to expand its global trade relationships.
Average GDP per Capita, by Economic Freedom Category Number of Countries in Each Economic Freedom Category FREE
MOSTLY FREE MODERATELY FREE MOSTLY UNFREE REPRESSED $71,717 $45,349
$27,526 $19,203
n/a NOT GRADED: 1 MOSTLY
UNFREE: 2 MOSTLY FREE: 18 MODERATELY FREE: 23
2 9 The Heritage Foundation | heritage.org/Index •
as they continued to shed the toxic legacy of Communism. • Although France’s economic freedom score and ranking increased in the 2020 Index, the government’s proposed reforms are unlikely either to curtail very high levels of government spending or to reduce labor market rigidities.
U.K.
Ireland Iceland
Norway Denmark
Germany Switzerland Hungary Romania
Serbia Bulgaria
Greece Cyprus
Turkey Moldova
Georgia Armenia
Azerbaijan Italy
Slovakia Czech Rep. Austria Poland
France Spain
Portugal Netherlands Belgium Sweden
Finland Estonia
Latvia Lithuania Belarus Russia
Ukraine Malta
■ Croatia
Bosnia & Herzegovina Montenegro Slovenia North Macedonia Kosovo Albania
Luxembourg ■ Liechtenstein ■ 80–100 Free 70–79.9 Mostly Free 60–69.9 Moderately Free 50–59.9 Mostly Unfree 0–49.9 Repressed Not Graded ● ● ● ● ● ● Economic Freedom Scores Note: Economic indicators are population-weighted averages.
840.1 million GDP per capita (PPP): $36,453 Infl ation: 4.0% Unemployment rate: 7.3% Public debt: 60.8% of GDP 1–year growth: 2.4%
5–year growth: 2.0%
BY THE NUMBERS 10 2020 Index of Economic Freedom HIGHLIGHTS Middle East and North Africa (MENA) countries are successors to some of the world’s most ancient civilizations and remain at the crux of global politics, but relatively few enjoy economic freedom in the 21st century. At once blessed and cursed by enormous mineral resources, most countries in the region are defined by extreme concentrations of wealth and widespread poverty. Most worrisome is the region’s ongoing notoriety as the world’s most acute hot spot for economic, political, and security vulnerabilities, which its authoritarian governments have tried to address with costly subsidies. The region’s GDP per capita ($21,975) is the third highest among the five
has been soft. The MENA region continues to suffer from high unemployment (9.8 percent), particularly among the young. Despite governmental efforts in the past decade to answer popular demands for more freedom, the lives of the region’s people have not improved. Even in Tunisia, birthplace of the “Arab Spring,” economic freedom has withered. The grading of economic freedom for Iraq, Syria, Libya, and Yemen remains sus- pended because of ongoing violence and unrest. Notable Countries •
gains in the rule of law. Jordan suffered a regional drop in rank, reflecting consistently low scores on such rule-of-law indicators as property rights and (especially) government integrity.
Average GDP per Capita, by Economic Freedom Category Number of Countries in Each Economic Freedom Category FREE
MOSTLY FREE MODERATELY FREE MOSTLY UNFREE REPRESSED n/a $79,276 $39,658 $13,474 $17,498 REPRESSED: 2 NOT GRADED: 4 MOSTLY UNFREE: 3 MODERATELY FREE: 6 MOSTLY
FREE: 3
11 The Heritage Foundation | heritage.org/Index • Economic freedom in Egypt also improved in the 2020 Index, but the government still needs to adopt pro-business policies, reduce subsidies, and continue fiscal reforms. •
government spending still hinders greater economic freedom. The economically competitive “Start-up Nation” is anchored in strong rule of law and efficient regulation. •
in the 2020 Index. The Saudi economy has been rated “moderately free” for most of the past two decades. The government is continuing efforts to diversify the economy away from its dependence on oil. MIDDLE EAST/NORTH AFRICA: COUNTRIES Morocco
Algeria Libya
Syria Iraq
Iran Saudi Arabia United Arab Emirates
Qatar Jordan
Yemen Oman
Egypt Lebanon
Israel Tunisia
Kuwait ■ Bahrain 80–100 Free 70–79.9 Mostly Free 60–69.9 Moderately Free 50–59.9 Mostly Unfree 0–49.9 Repressed Not Graded ● ●
● ● ● Economic Freedom Scores Total population: 444.1 million GDP per capita (PPP): $21,975 Infl ation: 8.0% Unemployment rate: 9.8% Public debt: 55.2% of GDP 1–year growth: 1.6%
5–year growth: 2.9%
BY THE NUMBERS Note: Economic indicators are population-weighted averages. 12 2020 Index of Economic Freedom HIGHLIGHTS Sub-Saharan African countries’ scores generally fall into the lower cat- egories of economic freedom, although modest advances in economic freedom have spurred an uptick of economic growth in several countries. Unfortunately, the region’s scores on property rights, government integrity, fiscal health, and business freedom are all lower than world averages by 10 points or more. Aver- age GDP per capita (just $4,148) is the lowest for any of the five global regions in the 2020 Index. Unemployment dropped to 6.3 percent, however, possibly indicating some progress in reducing widespread underemployment and shrink- ing the region’s large informal sectors. Perhaps the most tragic consequence of the dearth of economic freedom in Sub-Saharan Africa is its correlation with severe food shortages and poor nu- trition, which in turn are directly and causally related to the region’s political instability, high infant mortality rates, disease outbreaks, childhood learning disabilities, and frequent famines. In the longer term, foreign aid from the West cannot solve the food security problem in Sub-Saharan Africa. The solution to that problem—and to the many other challenges in the region—is more eco- nomic freedom. Notable Countries •
in the 2020 Index, but the government needs to improve government integrity and judicial effectiveness.
Average GDP per Capita, by Economic Freedom Category Number of Countries in Each Economic Freedom Category FREE
MOSTLY FREE MODERATELY FREE MOSTLY UNFREE REPRESSED n/a $12,990 $12,015 $4,177
$4,747 REPRESSED: 9 NOT GRADED: 1 MOSTLY UNFREE: 30 MODERATELY FREE: 6 MOSTLY FREE: 2 13 The Heritage Foundation | heritage.org/Index •
return to the “repressed” category. Achieving the government’s ambitious goal of establishing Togo as a financial and logistics hub, however, will require reforms in the judicial system and a commitment to tackling corruption. •
rank dropped in the 2020 Index, and it remains “mostly unfree.” The government needs to confront persistent labor market rigidities and pursue stricter application of rules against anticompetitive behavior.
Mauritania Senegal Guinea
Côte d’Ivoire
Sierra Leone Liberia ■ Cabo Verde Gambia Guinea Bissau Mali Burkina
Faso Ghana
Togo Benin
Equitorial Guinea São Tomé and Príncipe ■ Gabon
Niger Nigeria
Cameroon Central African Rep. Chad Sudan
Ethiopia Dem. Rep. Congo Angola
Namibia Botswana
South Africa
Lesotho Eswatini
Zimbabwe Zambia
Tanzania Malawi
■ Comoros
Seychelles ■ Mozambique Madagascar Mauritius ■ Rwanda
Burundi Rep.
Congo Kenya
Uganda Somalia
Djibouti Eritrea
80–100 Free 70–79.9 Mostly Free 60–69.9 Moderately Free 50–59.9 Mostly Unfree 0–49.9 Repressed Not Graded ● ●
● ● ● Economic Freedom Scores Total population: 1.04 billion GDP per capita (PPP): $4,148 Infl ation: 11.9% Unemployment rate: 6.3% Public debt: 51.7% of GDP
1–year growth: 3.9%
5–year growth: 4.3%
BY THE NUMBERS Note: Economic indicators are population-weighted averages. 14 2020 Index of Economic Freedom HIGHLIGHTS THE BENEFITS OF FREE TRADE Over the past seven decades, growing numbers of individuals, businesses, and countries throughout the world have recognized the benefits of free trade. The creation of the General Agreement on Tariffs and Trade in 1947, establishment of the World Trade Organization in 1995, and negotiation of scores of prefer- ential trade agreements have eased the flow of goods and services between in- dividuals and firms, have added value to local economies, and have contributed enormously to the growth of the global economy. Today, however, many people are questioning the benefits of free trade and calling for protectionist trade policies as the way to address every perceived flaw within the global economy. In such an environment, the need to defend the freedom to trade could not be more important or more urgent. The Economic Case for Free Trade The trade freedom indicator in the Index of Economic Freedom correlates strongly with overall indicators of prosperity and human development. As shown in the chart on page 15, countries with greater trade freedom have high- er—and often much higher—income per capita. The individuals within these countries experience greater food security, healthier environments, increased political stability, and higher levels of social progress. Despite these manifest benefits, however, governments impose a wide variety of regulations and restrictions on trade that distort or limit opportunities for businesses and consumers. Policies like tariffs and quotas that restrict imports and even policies like subsidies that are meant to support exports disrupt the natural flow of trade, arbitrarily increase costs, reduce efficiency, and can stifle the research and investment that are essential for growth and development. Fighting a Return to Protectionism Unfortunately, protectionist pressures seem to be increasing. The United States, although historically in favor of trade, has imposed tariffs on more than 14 percent of its total imports over the past several years, making trade less free and causing its average applied tariff rate to increase by 73 percent. Countries like France are now imposing non-tariff trade barriers on e-commerce busi- nesses, and developing countries like India continue to maintain high levels of tariffs on agricultural imports in an attempt to protect domestic industries. Recently, however, there have been efforts to protect the efficient global trading system that has developed over the past several decades. At the end of 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPPTP), which includes seven Asian countries and two in South America as well as Canada and Mexico, entered into force. Just a few months later, the European Union and Japan finalized an economic partner- ship agreement, and by the summer of 2019, the European Union had signed a trade agreement with the Mercosur states of Argentina, Brazil, Paraguay, and Uruguay. Equally notable, African countries have also been advancing a free trade agenda. Of the 55 African Union states, 54 have signed the African Continental 15 The Heritage Foundation | heritage.org/Index Free Trade Agreement (AfCFTA), and 27 countries have ratified the agreement. In addition, several other bilateral trade agreements have been formalized that extend the benefits to trade beyond the most favored nation requirements of the World Trade Organization. Protecting Our Trade Freedoms Nevertheless, maintaining a free and open trading system in the 21st cen- tury is increasingly challenging. The 2020 Index includes four essays that illus- trate that complexity by examining the intricacies of the global trading system. Topics include: NATIONS WITH MORE TRADE FREEDOM ALSO HAVE ... ... More Political Stability and Less Violence and Terrorism Higher scores indicate more political stability and less politically motivated violence and terrorism Lowest 1/3 Middle 1/3 Highest 1/3 35.2 40.3
66.3 ... More Food Security Higher scores indicate more food security Lowest 1/3 Middle 1/3 Highest 1/3 43.3 57.3
73.7 ... Higher Average National Income Lowest 1/3 Trade Freedom Middle 1/3 Highest 1/3 $3,769
$8,513 $28,947
... Healthier Environments and Less Polluted Ecosystems Higher scores indicate better environmental protection Lowest 1/3 Middle 1/3 Highest 1/3 47.8 54.5
67.3 SOURCES: 2020 Index of Economic Freedom, The World Bank, The Economist Intelligence Unit, and Yale University. heritage.org 16 2020 Index of Economic Freedom HIGHLIGHTS • A discussion of the intricacies of global supply chains from the perspective of the North American automotive industry; • The role of one of the most important institutions of the global trading system, the World Trade Organization, the WTO’s role in promoting free trade, and the future of the organization; • An examination of the increasing role of digital trade and how it can be enhanced or hindered by government intervention; and • A discussion of the future of trade agreements and the complexity involved in making new trade deals. Debates about trade are likely to continue in the years ahead, and those who love freedom will be called upon to defend the openness of our international system and the rights of individuals to engage in commerce wherever and with whomever. The freedom to trade is the foundation of economic advancement, and the expansion of global markets has proven to be a powerful engine for growth and a key factor in the worldwide fight against poverty.
Founded in 1973, The Heritage Foundation is a research and educational institution—a think tank—whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. We believe the principles and ideas of the American Founding are worth conserving and renewing. As policy entrepreneurs, we believe the most effective solutions are consistent with those ideas and principles. Our vision is to build an America where freedom, opportunity, prosperity, and civil society flourish. Heritage’s staff pursues this mission by performing timely, accurate research on key policy issues and effectively marketing these findings to our primary audiences: members of Congress, key congressional staff members, policymakers in the executive branch, the nation’s news media, and the academic and policy communities. Governed by an independent Board of Trustees, The Heritage Foundation is an independent, tax-exempt institution. Heritage relies on the private financial support of the general public—individuals, foundations, and corporations—for its income, and accepts no government funds and performs no contract work. Heritage is one of the nation’s largest public policy research organizations. Hundreds of thousands of individual members make it one of the most broadly supported think tanks in America. For more information, or to support our work, please contact The Heritage Foundation at (800) 544-4843 or visit heritage.org. Yüklə 5,62 Mb. Dostları ilə paylaş:
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