See how the U.S. ranks in this comparison of the economic freedom of 165 countries around the world.
Do you live in a free society? Individuals with economic freedom are free to choose, trade, and cooperate with others, and compete as they see fit, and their actions do not violate those same rights of others, according to the Fraser Institute.
History suggests that countries with more economic freedom grow faster, writes economist Pierre Lemieux and policy analyst Alexandre Moreau for the Canadian independent think tank MEI. And those with less economic freedom sometimes don’t grow at all.
In its annual Index of Economic Freedom, the Heritage Foundation, a conservative think-tank in Washington, D.C., compares the economic freedom of countries around the world based on the idea that economic freedom is strongly associated with healthier societies, cleaner environments, greater per-capita wealth, human development, democracy, and poverty elimination.
The index measures economic freedom and ranks the countries based on 12 factors:
Rule of law (property rights, government integrity, judicial effectiveness)Government size (government spending, tax burden, fiscal health)Regulatory efficiency (business freedom, labor freedom, monetary freedom)Open markets (trade freedom, investment freedom, financial freedom.)
Each of the 12 factors is graded on a scale of 0 to 100, where 100 is best. A country’s overall score is derived by averaging these 12 economic metrics, with equal weight being given to each. Most of the data covers the second half of 2020 through the first half of 2021.
According to the index, these are the countries with the most economic freedom.
These are the eight countries considered ‘free,’ with a score of 80-100:
1. Singapore
Overall score: 84.4Property rights: 94.4Tax burden: 90.5Government spending: 90.1Business freedom: 83.1Financial freedom: 80
Singapore, with the highest overall score, also ranks No. 1 for trade freedom. Trade freedom measures the extent of tariff and non-tariff barriers that affect imports and exports of goods and services.
2. Switzerland
Overall score: 84.2Property rights: 95.2Tax burden: 70.1Government spending: 67.2Business freedom: 84.3Financial freedom: 90
Switzerland ranks No.1 for judicial effectiveness, and, along with Australia, has the highest score for financial freedom. Financial freedom is an indicator of banking efficiency as well as a measure of independence from government control and interference in the financial sector. State ownership of banks and other financial institutions such as insurers and capital markets reduces competition, the report says.
3. Ireland
Overall score: 82.0Property rights: 92.6Tax burden: 76.5Government spending: 79.9Business freedom: 87.2Financial freedom: 70
4. NewZealand
Overall score: 80.6Property rights: 8.2Tax burden: 70.8Government spending: 53.5Business freedom: 81.3Financial freedom: 80
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5. Luxembourg
Overall score: 80.6Property rights: 97.4Tax burden: 64.1Government spending: 41.5Business freedom: 89.3Financial freedom: 80
Luxembourg ranks highest for investment freedom. Many countries impose a variety of restrictions on foreign and domestic investment, including restricting access to foreign exchange, restrictions on payments, transfers, and capital transactions, or closing certain industries to foreign investment, the report says.
6. Taiwan
Overall score: 80.1Property rights: 81.3Tax burden: 79.2Government spending: 90.7Business freedom: 84.3Financial freedom: 60
7. Estonia
Overall score: 80.0Property rights: 91.5Tax burden: 81.1Government spending: 48.4Business freedom: 86.9Financial freedom: 70
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These 22 countries are ‘mostly free,’ with a score of 70-79.9:
8. Netherlands
Overall score: 79.5Property rights: 96.2Tax burden: 51.2Government spending: 45.4Business freedom: 88.1Financial freedom: 80
9. Finland
Overall score: 78.3Property rights: 100.0Tax burden: 68.4Government spending: 10.7Business freedom: 88.7Financial freedom: 80
Finland ranks No. 1 for property rights.
10. Denmark
Overall score: 78.0Property rights: 98.6Tax burden: 42.3Government spending: 21.1Business freedom: 89.0Financial freedom: 80
Denmark ranks No.1 for government integrity. The score for this component is derived by averaging scores for perceptions of corruption, risk of bribery, and control of corruption including “capture” of the state by elites and private interests.
11. Sweden
Overall score: 77.9Property rights: 97.3Tax burden: 44.9Government spending: 26.4Business freedom: 84.6Financial freedom: 80
12. Australia
Overall score: 77.7Property rights: 91.7Tax burden: 62.5Government spending: 51.6Business freedom: 84.6Financial freedom: 90
Australia, along with Switzerland, has the highest score for financial freedom.
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13. Iceland
Overall score: 77.0Property rights: 97.1Tax burden: 72.9Government spending: 36.8Business freedom: 83.3Financial freedom: 70
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14. Norway
Overall score: 76.9Property rights: 99.6Tax burden: 56.4Government spending: 19.5Business freedom: 91.4Financial freedom: 60
Norway ranks first for business freedom. This component measures the extent to which a country’s regulatory and infrastructure environments constrain the efficient operation of businesses.
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15. Canada
Overall score: 76.6Property rights: 89.5Tax burden: 75.7Government spending: 39.6Business freedom: 78.8Financial freedom: 80
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16. Germany
Overall score: 76.1Property rights: 95.7Tax burden: 59.9Government spending: 34.5Business freedom: 87.2Financial freedom: 70
17. Lithuania
Overall score: 75.8Property rights: 88.6Tax burden: 84.54Government spending: 59.9Business freedom: 87.3Financial freedom: 70
18. Latvia
Overall score: 74.8Property rights: 88.5Tax burden: 76.4Government spending: 53.2Business freedom: 81.9Financial freedom: 60
19. South Korea
Overall score: 74.6Property rights: 90.5Tax burden: 60.4Government spending: 84.5Business freedom: 84.8Financial freedom: 60
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20. Chile
Overall score: 74.4Property rights: 73.0Tax burden: 72.4Government spending: 78.1Business freedom: 76.2Financial freedom: 70
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21. CzechRepublic
Overall score: 74.4Property rights: 88.8Tax burden: 78.9Government spending: 44.7Business freedom: 80.6Financial freedom: 80
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22. Austria
Overall score: 73.8Property rights: 98.4Tax burden: 45.5Government spending: 20.3Business freedom: 82.3Financial freedom: 70
Austria ranks second overall, and first on this list, for monetary freedom. Monetary freedom combines a measure of inflation with an assessment of various government activities that distort prices. Price stability without microeconomic intervention is the ideal state for the free market, the report says.
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23. Cyprus
Overall score: 72.9Property rights: 85.6Tax burden: 80.3Government spending: 44.3Business freedom: 74.9Financial freedom: 60
24. United Kingdom
Overall score: 72.7Property rights: 96.2Tax burden: 65.4Government spending: 46.3Business freedom: 79.1Financial freedom: 80
25. United States
Overall score: 72.1Property rights: 95.7Tax burden: 75.9Government spending: 54.5Business freedom: 87.5Financial freedom: 80
26. Georgia
Overall score: 71.8Property rights: 63.8Tax burden: 89.1Government spending: 72.7Business freedom: 74.1Financial freedom: 70
27. Malta
Overall score: 71.5Property rights: 87.8Tax burden: 69.0Government spending: 54.6Business freedom: 75.5Financial freedom: 50
28. Barbados
Overall score: 71.3Property rights: 72.6Tax burden: 80.6Government spending: 70.8Business freedom: 64.7Financial freedom: 60
29. Bulgaria
Overall score: 71.0Property rights: 77.3Tax burden: 93.9Government spending: 60.5Business freedom: 72.1Financial freedom: 60
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30. Mauritius
Overall score: 70.9Property rights: 85.6Tax burden: 91.3Government spending: 73.4Business freedom: 72.0Financial freedom: 70
Some of the countries that rank at the bottom include North Korea (last), Venezuela, Cuba, Sudan and Zimbabwe. Countries that were not rated primarily due to lack of data were: Afghanistan, Iraq, Libya, Somalia, Syria, Yemen and Lichtenstein.
See how other countries rank and explore the full report at Heritage.org.
