Global Launch of the Economic Freedom Index of the World 2007 in New-Delhi

Industry and Commerce Ministerof India, Shri Kamal Nath

The Economic Freedom Index of the World, which was begun by Nobel-Prize winning economist Milton Friedman measures economic freedom index of countries in five areas:

a) Size of the Government
b) Legal Structure and Security of Property Rights
c) Access to Sound Money
d) Freedom to Trade Internationally
e) Regulation of Business, Credit and Labour

These broad categories are further divided into 42 sub-components, which measure the degree of economic freedom in 141 countries of the world. This year’s index includes a number of new components based on the World Bank’s Doing Business ratings. In the past year, more data has become available and, so, 11 new countries have been added to the 130 countries in last year’s index. They are: Angola, Bosnia and Herzegovina, Burkina Faso, Ethiopia, Kazakhstan, Kyrgyz Republic, Lesotho, Mauritania, Moldova, Montenegro, and Serbia.

The most economically free country in the World, as per the Index, is Hong Kong, scoring 8.9 points on a scale of 0-10. It is followed by Singapore (8.8), New Zealand (8.5), Switzerland (8.3), Canada, the US and the UK tied at fifth place with a rating of 8.1. Germany shares the 18th position together with El Salvador, Oman and Austria with a score of 7.6.

Factors like lower unemployment, higher per capita GDP, higher income for the poor characterize nations with high level of economic freedom.

India is ranked at 69th position with a score of 6.6 in the current Index ahead of China which is ranked 86th with a score of 6.3. Though, India has improved its score from 6.5 to 6.6, it has slipped from 60th position last year.

Dr. René Klaff, Regional Director, FNSt South Asia

Speaking at the launch, Dr. René Klaff outlined the importance of economic freedom especially for the developing economies. He said that “The concept of Economic Freedom is a helpful indicator to explain why some market economies work better than others, and an indicator to hint at the flaws – and the benefits – of certain economic policies and political strategies. Economic Freedom is at the heart of a functioning market economy.”

Mark Mullins, Executive Director,Fraser Institute

Mark Mullins, executive director of Fraser Institute, Meghnad Lord Desai, London School of Economics and Dr. Parth Shah, Centre for Civil Society were also present during the launch.