Economic Freedom of the World 2013

The index published in Economic Freedom of the World
measures the degree to which the policies and institutions of countries are supportive of economic freedom. The
cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property. Forty-two variables are
used to construct a summary index and to measure the degree of economic freedom in five broad areas :

 1 Size of Government ;
 2 Legal System and Property Rights ;
 3 Sound Money ;
 4 Freedom to Trade Internationally ;
 5 Regulation.

Since our first publication in 1996, numerous studies have used the data published in Economic Freedom of the World
to examine the impact of economic freedom on investment, economic growth, income levels, and poverty rates. Virtually
without exception, these studies have found that countries with institutions and policies more consistent with economic freedom have higher investment rates,
more rapid economic growth, higher income levels, and a more rapid reduction in poverty rates.

The EFW index now covers 152 countries and territories. Data are available for approximately 100 nations and territories back to 1980, and many back to 1970. This data set makes it possible for scholars to analyze the impact of both cross-country differences in economic freedom and changes in that freedom across a three decade time frame

Economic freedom from around the world

Average chain-linked rating

The average chain-linked economic freedom rating for the 101 countries with ratings since 1980 has increased from 5.34 in 1980 to 5.82 in 1990 to 6.74 in 2000 and
finally to 6.87 in 2011. After a global average drop between 2007 and 2009, the average summary rating increased modestly in both 2010 and 2011, though it remains
below its peak level of 6.92 in 2007. The chain-linked index is used for this comparison because it is most appropriate for measurement of changes across time.

Countries included

There are 152 countries included in this year’s index, up from 144 last year. The new countries added to the index (with data for both 2010 and 2011) are Brunei
Darussalam, Cape Verde, The Gambia, Lebanon, Suriname, Swaziland, Tajikistan, Timor-Leste, and Yemen. Because of the civil war and the unreliability of the data
since 2011, the rating for Syria has been temporarily suspended, though historical data are included in Chapter 2 : Country Data Tables.

Top-rated countries

Hong Kong and Singapore, once again, occupy the top two positions. The other nations in the top ten are New Zealand, Switzerland, United Arab Emirates,
Mauritius, Finland, Bahrain, Canada, and Australia.
Other major countries The rankings of some other major countries are : United Kingdom (12th), United
States (17th), Germany (19th), Japan (33rd), South Korea (33
rd), France (40th), Italy (83rd), Mexico (94th), Russia (101
st), Brazil (102nd), India (111th), and China (123rd).

Lowest-rated countries

The ten lowest-rated countries are : Algeria, Democratic Republic of Congo, Burundi, Central African Republic, Angola, Chad, Zimbabwe, Republic of Congo, Myanmar, and,
in last place, Venezuela. Eight of the countries in the bottom ten are located in Africa.