The Fraser Institute economic freedom index is an annual publication by the Canadian public policy think tank, The Fraser Institute, which ranks countries by their economic freedom level. The index is calculated by looking at the size of government and the level of regulation and taxation imposed on citizens and businesses, among other factors. The index has been the subject of much debate in recent years, with some critics arguing that the index fails to accurately measure the level of economic freedom in a particular country.
The Fraser Institute defines economic freedom as “the ability of individuals and firms to engage in economic activities without interference from government.” According to the Fraser Institute, this includes the right to trade and invest in markets without restrictions, the right to choose one’s own job without state control, and the right to own property without government interference. The index is composed of 42 different variables, including the size of government, taxation, regulation, and labour market freedom.
The Fraser Institute ranks countries on a ten point scale, with a score of 9.8 being the highest possible score and a score of 0 the lowest. In this system, a score of 7.5 or above is considered to be “free”, 5.0 to 7.4 “mostly free”, 4.0 to 4.9 “moderately free”, 3.0 to 3.9 “mostly unfree”, and 0 to 2.9 “repressed”.
In 2021, the top ten countries in terms of economic freedom were Hong Kong, Singapore, New Zealand, Switzerland, Australia, Ireland, Estonia, Canada, the United Arab Emirates, and Malta, all of which had scores greater than 8.5. The United States came in at number 12 with a score of 8.04.
In general, countries with higher levels of economic freedom tend to have higher levels of economic growth, higher per capita incomes, and a higher likelihood of becoming a high-income country. Moreover, a safe and secure environment is likely to be associated with higher levels of economic freedom.
It is important to note, however, that many of the variables used to construct the Fraser Institute economic freedom index are open to debate. For instance, the Fraser Institute’s measure of the size of government does not take into account the quality of public services, which can differ widely between countries. In addition, the methodology used to measure the level of economic regulation does not take into account the impact of regulations on specific businesses or sectors.
The Fraser Institute economic freedom index does, however, provide valuable information on economic freedom as a whole, and it can be used as a useful starting point for further analysis of economic freedom. In the end, it is up to the reader to decide how to interpret the index and how to use it in the context of the country in question.
