It is the 100th anniversary of Milton Friedman’s birth this year, adding particular significance to the release of the Economic Freedom of the World Report, which Friedman was instrumental in creating.
The Fraser Institute, a Canadian think tank, announced the release Tuesday. The report is supported by the Charles G. Koch Charitable Foundation as well as the Searle Freedom Trust. Authors and contributors hailed from a variety of institutions, including Florida State University, Southern Methodist University, Beloit College, the Cato Institute, the World Bank, and the World Economic Forum.
The report ranks countries, measuring “the degree to which the policies and institutions of countries are supportive of economic freedom.” The report is compiled using 42 variables to measure economic freedom across five areas.
The global economic crisis is mentioned early on in the report as a factor in the decline in overall economic freedom between 2007 and 2009 and the slight uptick most recently. The authors write that “responses to the economic crisis have reduced economic freedom in the short term and perhaps prosperity over the long term, but the upward movement this year is encouraging.”
Hong Kong takes the top spot again this year, with Singapore, New Zealand, Switzerland, Australia, Canada, Bahrain, Mauritius, Finland and Chile making up the rest of the top 10 in order from most to least economically free.
The United States has fallen in the economic freedom rankings consistently for the last decade, but is still well ahead of Mozambique and Burundi, which are each tied for the 10th worst spot of the 144 nations and territories ranked.
Innovation does not factor prominently in the report, but entrepreneurship does, with the final chapter dedicated entirely to exploring how institutions promote entrepreneurship and growth. The study authors conclude most notably that, while few entrepreneurial ventures noticeably drive overall job creation, self-employment and small firms are a large component of overall job creation.
The report comes in the wake of the World Economic Forum’s Global Competitiveness report, in which the United States also slipped from fifth to seventh place.
Let us know what you think of the report’s conclusions in the comments.
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