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Economy
Friday, October 2, 2015 - 09:18
Basement blues

South Africa ranks 96 out of 157 countries and territories included in the Economic Freedom of the World: 2015 Annual Report, released in September by The Free Market Foundation (FMF) in conjunction with Canada’s Fraser Institute.
Last year, South Africa ranked 89.
“The persistent decline in South Africa’s ranking and rating from 42nd (7.08) in 2000 to 96th (6.74) in 2013 is distressing and reflects what people can see happening around them,” says FMF director, Temba Nolutshungu. “The decline in economic freedom is the result of government’s insistence on dominating the economy and crowding out the private sector, which has a negative impact on growth, employment, poverty reduction and individual liberty.”
Hong Kong again tops the index, with a score of 8.97 out of 10, continuing its streak of number one rankings, followed by Singapore(8.52), New Zealand (8.19), Switzerland (8.16), United Arab Emirates (8.15), Mauritius (8.08), Jordan (7.93), Ireland (7.90), Canada (7.89), with the United Kingdom and Chile (tied at 7.87) for 10th.
Other notable countries include the United States (7.73), Japan (7.52), Germany (7.50), Russia (6.69), China (6.44) and India (6.43).
Comments Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute, “Hong Kong’s still number one, but because democracy is the best safeguard of freedom. If China, which ranks low in economic freedom, encroaches on Hong Kong, we can expect the country’s ranking to fall. ”
The report, which is based on data from 2013 (the most recent year available), measures the economic freedom (levels of personal choice, ability to enter markets, security of privately owned property, rule of law, etc.) by analysing the policies and institutions of 157 countries and territories.
“Economic freedom breeds prosperity, and the most economically free countries offer the highest quality of life while the lowest-ranked countries are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens,” McMahon says.
Other notable rankings include Japan (26), Germany (29), Russia (99), China (111) and India (114). The 10 lowest-ranked countries are Angola, Central African Republic, Zimbabwe, Algeria, Argentina, Syria, Chad, Libya, Republic of Congo, and Venezuela. Some despotic countries such as North Korea and Cuba can’t be ranked due to lack of data.
Globally, the average economic freedom score rose slightly to 6.86 out of 10 from 6.84 last year.
According to research in top peer-reviewed journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$38 601 in 2013, compared to US$6 986 for bottom quartile nations. Moreover, the average income in 2013 of the poorest 10% in the most economically free countries (US$9 881) dwarfed the overall average income in the least free countries (US$1 629). And life expectancy is 80.1 years in the top quartile of countries compared to 63.1 years in the bottom quartile.
The Fraser Institute produces the annual Economic Freedom of the World (EFW) report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in 90 nations and territories. It’s the world’s premier measurement of economic freedom, ranking countries based on economic freedom, which is measured in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business. See the full report at www.freetheworld.com.
South Africa scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):
o Size of government: changed to 5.53 from 5.54 in the last year’s report
o Legal system and property rights: changed to 5.81 from 5.92
o Access to sound money: changed to 8.17 from 8.10
o Freedom to trade internationally: changed to 7.03 from 7.20
o Regulation of credit, labour and business: changed to 7.15 from 7.10

Notes Leon Louw, Executive director of the FMF, “There were declines in South Africa’s ratings for four of the five key components of economic freedom and one positive change, which was in the area of sound money. In order to achieve economic growth and reduce the massive unemployment in the country, the government and the trade unions will have to relent and allow the unemployed to start earning a living.”
 

Copyright © Insurance Times and Investments® Vol:28.10 1st October, 2015
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