Friday, 13 January 2012Global economic freedom declined in 2011, The Heritage Foundation and the Wall Street Journal said in an annual survey released on Thursday (January 12th), citing the sharp increase in government spending in many countries as a key factor.
Greece, which implemented numerous austerity measures to avoid default on debt, saw the largest score decline in the report. The crisis-hit Balkan nation lost 4.9 points on a 100-point scale to sink into a grouping of "mostly unfree" economies, and was evaluated as the 119th freest economy in the world.
Economic freedom in seven other Southeast Europe nations also declined, according to the 2012 Index of Economic Freedom.
"Eroding hard-earned gains in economic freedom in years past, the mounting burden of reckless government spending in many cases has overwhelmed gains in economic freedom achieved in other policy areas," the two US-based organisations noted.
The 18th edition of the index covers 184 countries, evaluating their performance in four broad areas of economic freedom -- rule of law, regulatory efficiency, limited government, and open markets.
It ranked 179 of them on the basis of their scores on ten indicators: property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labour freedom, monetary freedom, trade freedom, investment freedom and financial freedom.
The surveyed economies are given marks from 0 (lowest) to 100 (highest) on each of those indicators and their overall scores determine their individual rankings in the Index. Hong Kong had the highest ranking, as it has for all 18 years the index has been published.
The report classifies countries into five groups: "free" (those with combined scores of 80 or higher); "mostly free" (70-79.9); "moderately free" (60-69.9); "mostly unfree" (50-59.9); or "repressed" (under 50).
In Southeast Europe, only Albania and Macedonia gained footing in the ranking. Cyprus achieved the highest score in the region despite losing ground from 2011. It was ranked 20th in the world, with a score of 71.8 points, and was the only nation in the region to achieve a "mostly free" ranking.
Seven other regional countries -- Albania, Bulgaria, Croatia, Macedonia, Montenegro, Romania and Turkey -- were classified as "moderately free," while Bosnia and Herzegovina (BiH), Moldova, Greece and Serbia were in the group of "mostly unfree" economies.
In addition to Greece, economic freedom declined in Cyprus, Bulgaria, Croatia, BiH, Turkey, Moldova and Romania. Serbia and Montenegro saw their rankings remain unchanged.
The fact that economic freedom has declined in most of the SEE countries over the past year was an issue "of serious concern," according to Joel Anand Samy, co-founder of both the Adriatic Institute for Public Policy and the International Leaders Summit.
The two organisations have worked closely with The Heritage Foundation and the Wall Street Journal since their founding in 2004, including in relaying their findings on economic freedom to the public, businesses and political leaders of the region.
The regional decline in economic freedom was primarily due to two major factors. "One is the issue of government spending and fiscal irresponsibility, as well as the region's very weak rule of law and protection of property rights that repulse capital and the creation of new jobs," Samy told SETimes on Thursday.
"The whole issue of the weak rule of law in the region is a serious concern not only for economic freedom, but for political freedom as well," he noted.
"Unfortunately, what we have seen in Southeast Europe is that there really has not been a transition from communism to rule-of-law-based market reforms. And that's why you have politicians with significant unexplained wealth and you have courts that are politically influenced, and that's what eradicates trust amongst investors both domestically and from foreign investors that want to risk their capital in uncertain environments."
Samy further stressed that "countries that do not commit themselves to real reforms their citizens and taxpayers will be on the losing side". |
Friday, 13 January 2012
Setimes
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