Tuesday, January 13, 2009

North America Leads World in Economic Freedom, 2009 Index Finds

/PRNewswire-USNewswire/ -- North America is the world leader in economic freedom, boasting two of the 10 freest countries in the 2009 "Index of Economic Freedom," published annually by The Wall Street Journal and The Heritage Foundation.

The United States enjoyed the highest ranking within the region and finished sixth in the world, followed immediately by Canada.

One reason the region does so well is the North America Free Trade Agreement. "NAFTA has been a positive force enhancing economic freedom," the Index authors wrote, "connecting more than 400 million people in an economic area with about one-third of the world's total GDP."

Mexico still has a way to go to catch up with its northern neighbors, and could begin doing so by improving its investment freedom and freedom from corruption, the authors noted.

In a first for the Index, Canada, Mexico and the United States are split off from the rest of the Americas and graded as a separate region.

To compile the Index, the authors measured 183 countries across 10 specific factors of economic freedom: The higher the score, the lower the level of government interference. All countries were graded on a scale of zero to 100.

The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. Ratings in each category were averaged to produce the overall Index score.

This year's Index aims to be the most precise measure of economic freedom ever published. The authors fine-tuned their methodology. For example, they fine-tuned the "labor" component, analyzing six labor freedom factors instead of the four studied in previous Indexes.

Worldwide, the average rating for economic freedom held essentially steady this year. However, "there is a real possibility that the economic freedom scores in this edition might represent the historical high point for economic freedom in the world," the authors warned. As governments attempt to stave off a global recession, their meddling could threaten economic freedom and long-term economic prosperity.

Of the 183 countries ranked (the most ever), only seven were classified as "free" (a score of 80 or higher). Another 23 were rated as "mostly free" (70-79.9). The bulk of countries -- 120 economies -- were rated either "moderately free" (60-60.9) or "mostly unfree" (50-50.9). The remaining 29 countries were rated "repressed" economies, with total freedom scores below 50.

This is the 15th consecutive year The Heritage Foundation and The Wall Street Journal have published the Index. The 2009 edition was edited by Kim Holmes, Heritage's vice president for foreign affairs, and Ambassador Terry Miller, head of Heritage's Center for International trade and Economics.

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