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Economic Freedom of the World: 2024 Annual Report

The Economic Freedom of the World: 2024 Annual Report has been released, providing a detailed analysis of economic freedom across 165 countries. This report evaluates how much freedom individuals have to make their own economic choices, emphasizing the significant impact economic freedom has on prosperity and quality of life.

Key Findings

1. Top-Ranked Countries: The report identifies the top three most economically free countries as:

• Hong Kong (1st)

• Singapore (2nd)

• Switzerland (3rd)

2. These countries exemplify policies that foster individual economic liberties, leading to more prosperous outcomes.

3. Global Decline in Economic Freedom: The report highlights a concerning trend: a global decline in economic freedom over the past three years, marking a reversal of nearly two decades of improvement. This decline raises critical questions about the policies and political climates contributing to this trend.

4. Disparities in Economic Outcomes: The findings illustrate stark disparities in economic freedom. On average, jurisdictions with high economic freedom report significantly better outcomes:

• GDP per capita in the freest countries is 7.6 times greater than in the least free countries.

• Individuals in these countries enjoy longer life expectancies, higher satisfaction with life, and lower rates of poverty and infant mortality.

5. Correlation with Positive Indicators: Higher economic freedom correlates with numerous positive indicators, including:

• Increased income levels

• Longer life expectancy

• Reduced corruption

6. The report shows that residents of the most economically free nations report higher happiness levels and better access to essential services.

Historical Context and Methodology

The measurement of economic freedom began with Freedom House, focusing primarily on political and cultural freedoms. In response, the Fraser Institute developed the Economic Freedom of the World index to reflect a market-oriented perspective more accurately. This index utilizes 42 distinct variables, such as government size, security of property rights, monetary policy, and trade freedom, to assess how economic policies influence individual freedoms and overall economic performance.

Influence and Criticisms

The report is frequently referenced in academic research and policy discussions, underscoring the critical role of economic freedom in fostering development and alleviating poverty. However, it has faced criticism regarding the strength of the correlation between economic freedom and growth. Some argue that countries experiencing high growth rates despite lower economic freedom challenge the index's validity. Additionally, the complexities of modern economies, particularly in northern Europe, demonstrate that high levels of welfare can coexist with significant economic freedom.

2024 Rankings Snapshot

Here are the top 10 jurisdictions according to the 2024 report:

1. Hong Kong

2. Singapore

3. Switzerland

4. New Zealand

5. United States

6. Denmark

7. Ireland

8. Canada

9. Australia

10. Luxembourg

Additional Rankings:

• Japan: 11th

• Germany: 16th

• Korea: 32nd

• France: 36th

• Italy: 51st

• Mexico: 65th

• India: 84th

• Brazil: 85th

• China: 104th

• Russia: 119th