Index of Economic Freedom

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Index of Economic Freedom
2010 Index Presentation Jakarta, Indonesia June
25, 2010 James M. Roberts Research Fellow for
Economic Freedom and Growth Center for
International Trade and Economics The Heritage
Foundation
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1995 to 2010 16 Years of the Index of Economic
Freedom
Index of Economic Freedom
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Timeless Principles of Economic Freedom
Index of Economic Freedom

• Fundamental right of every human to control his
  or her own labor and property
• Individuals should be free to work, produce,
  consume, and invest
• That freedom should be both protected by the
  state and unconstrained by the state
• Governments should allow labor, capital and goods
  to move freely, and refrain from coercion or
  constraint of liberty beyond the extent necessary
  to protect and maintain liberty itself
• Free MarketsOpen Competition

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Index of Economic Freedom
Measuring Economic Freedom

1. Business Freedom
2. Trade Freedom
3. Fiscal Freedom
4. Government Spending
5. Monetary Freedom
6. Investment Freedom
7. Financial Freedom
8. Property Rights
9. Freedom from Corruption
10. Labor Freedom

• Each freedom is measured between 0 and 100.
• Overall economic freedom score is a simple
  average of the 10 freedoms (equal weighting).

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Index of Economic Freedom
Major Information Sources

1. Business Freedom - World Bank Doing Business
2. Trade Freedom - World Bank WTO (Trade Policy
   Review)
3. Fiscal Freedom - OECD, IMF, Ernst and Young,
   Deloitte
4. Government Spending - OECD, IMF, World Bank
5. Monetary Freedom - IMF, EIU, central banks
6. Investment Freedom - EIU, IMF, World Bank,
   DOC
7. Financial Freedom - EIU, IMF, World Bank, DOC
8. Property Rights - USDOC, USDOS, IMF, EIU
9. Freedom from Corruption - Transparency
   International
10. Labor Freedom - World Bank Doing Business

• Also used to calculate scores information from
  various governmental websites articles from
  major international/domestic newspapers and
  specific country reports from other international
  organizations such as the Asian Development Bank,
  UN Commission for Trade and Development (UNCTAD),
  African Development Bank, and Inter-American
  Development Bank.

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Index of Economic Freedom
Ten Economic Freedoms Global Averages
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Which Countries Enjoy More Economic Freedom?
Index of Economic Freedom

• Top 10
• Free
• Hong Kong
• Singapore
• Australia
• New Zealand
• Ireland
• Switzerland
• Canada
• Mostly Free
• 8. United States
• 9. Denmark
• 10. Chile

• Bottom 10
• 179. North Korea
• 178. Zimbabwe
• 177. Cuba
• 176. Eritrea
• 175. Burma
• 174. Venezuela
• 173. Libya
• 172. Dem. Rep. of Congo
• 171. Turkmenistan
• 170. Solomon Island

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Index of Economic Freedom
Asia-Pacifics Performance in the 2010 Index
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Index of Economic Freedom
Economic Freedom by Region
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Indonesia's Economic Freedom
Index of Economic Freedom
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Indonesias Performance Further Reforms Needed
Index of Economic Freedom

• Indonesias economic freedom score is 55.5,
  making its economy the 114th freest in the 2010
  Index. Its score has improved by 2.1 points since
  last year, reflecting improvements in business
  freedom, fiscal freedom, and freedom from
  corruption.
• Indonesia is ranked 21st out of 41 countries in
  the AsiaPacific region, and its overall score is
  below the world average.
• Recent Improvements
• Improved entrepreneurial environment
• Enhanced regional competitiveness
• More vibrant private sector through
  decentralization
• Management of public finance has improved tariff
  barriers lowered.
• Lingering institutional impedimentsmore reforms
  needed
• Starting a business takes more than twice as long
  as the world average
• Onerous regulations
• Investment freedom curtailed by government
  interference
• Pervasive corruptionweak, nontransparent
  judicial institutions

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Malaysia's Economic Freedom
Index of Economic Freedom
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Cambodia's Economic Freedom
Index of Economic Freedom
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Vietnam's Economic Freedom
Index of Economic Freedom
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Index of Economic Freedom
Singapores Economic Freedom
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Global Recovery Keynesianism Is Not The Answer
Index of Economic Freedom

• Failure of Government Spending/Fiscal Stimulus to
  sustain recovery
• Collapse of welfare state model

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Index of Economic Freedom
How the 20 Largest Economies Performed
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Index of Economic Freedom
Higher Government Spending? Lower Growth
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Index of Economic Freedom
Fiscal Stimulus No Impact on Growth
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Economic Freedom Matters
Index of Economic Freedom

• Higher per Capita Economic Growth
• Poverty Reduction
• Improved Good Governance
• Enhanced Human Development
• Increased Investment
• Better Environmental Quality

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Index of Economic Freedom
Economic Freedom is Key to Prosperity
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index World
Bank, World Development Indicator Online,
www.worldbank.org/data
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Index of Economic Freedom
The Greater Economic Freedom, The Higher Standard
of Living
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index World
Bank, World Development Indicator Online,
www.worldbank.org/data
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Index of Economic Freedom
Economic Freedom Promotes Good Governance
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index the
Economist Intelligence Units Index of Democracy,
Country Forecasting Services, Economist
Intelligence Unit, at http//graphics.eiu.com/PDF
/Democracy20Index202008.pdf
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Index of Economic Freedom
Economic Freedom Reduces Poverty
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index Human
Development Reports, United Nations Human
Development Programme, at http//hdr.undp.org/en/r
eports/
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Index of Economic Freedom
Economic Freedom Promotes Human Development
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index Human
Development Reports, United Nations Human
Development Programme, at http//hdr.undp.org/en/s
tatistics/
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Index of Economic Freedom
Freedom of Press Promotes Economic Freedom
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index World
Bank, 2008 Freedom of the Press Word Rating
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Index of Economic Freedom
Economic Freedom Attracts Foreign Direct
Investment
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index World
Bank, 2008 Freedom of the Press Word Rating
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Index of Economic Freedom
Economic Freedom is Key to Overall Well-Being
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index 2009
Legatum Prosperity Index An Inquiry into Global
Wealth and Wellbeing, at http//www.prosperity.com
/downloads/2009LegatumProsperityIndexReport.pdf.
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Index of Economic Freedom
How to Achieve Better Environmental
Protection? Not by Meetings after Meetings
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Index of Economic Freedom
Economic Freedom Promotes a Clean Environment
Sources Terry Miller and Kim R. Holmes, 2010
Index of Economic Freedom (Washington, D.C. The
Heritage Foundation and Dow Jones Company,
Inc., 2010), at www.heritage.org/index Daniel
C. Esty, M. A. Levy, C. H. Kim, A. de Sherbinin,
T. Srebotnjak, and V. Mara, 2008 Environmental
Performance Index (New Haven Yale Center for
Environmental Law and Policy, 2008), at
http//epi.yale.edu/Framework.
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Three Informative Chapters of the 2010 Index
Index of Economic Freedom

• Trading for Prosperity
• by the Honorable Elaine Chao
• Economic Freedom and Crisis Performance in Asia
• by Derek Scissors, Ph.D.
• Access to Information
• Vital for Efficient Markets Economic Reform
• by James Roberts

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Index of Economic Freedom
For More Information, Please Visit
www.heritage.org/index
For the first time ever, the U.S. has dropped out
of the free category and fallen to mostly free in
the 2010 Index of Economic Freedom. Of the
worlds 20 largest economies, the U.S. has
suffered the largest drop in economic freedom.
Its clear why our economy is failing to generate
jobs. To see other highlights from the 2010 Index
of Economic Freedom click here.
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Index of Economic Freedom
Thank You!
Q and A Session