Author: Alessandro Magno, Denise Bedell, Tina Aridas, Valentina Pasquali

The Index of Economic Freedom is published annually by The Wall Street Journal and The Heritage Foundation, a conservative-leaning think tank in Washington DC, and it tracks levels of economic freedom around the world. First launched in 1995, the index now covers 10 measures of economic openness, regulatory efficiency, the rule of law, and competitiveness, and 185 countries. In the latest, 2013 ranking, Hong Kong comes up on top and North Korea is last.

By Valentina Pasquali. Project Coordinator: Denise Bedell


Data is from the 2013 Index of Economic Freedom, from the Heritage Foundation and the Wall Street Journal.

Index of Economic Freedom 2013

Dark red - highest rates

Light red - lowest rates

Free: 100-80

Mostly free: 79.9-70

Moderately free: 69.9-60

Mostly unfree: 59.9-50

Repressed: 49.9-40


Data is from the 2013 Index of Economic Freedom, from the Heritage Foundation and the Wall Street Journal.

Index of Economic Freedom 2013

Click on the column heading to sort the table.

Free: 100-80

Mostly free: 79.9-70

Moderately free: 69.9-60

Mostly unfree: 59.9-50

Repressed: 49.9-40

There is no universally accepted concept or definition of economic freedom. The most common approach emphasizes the efficiency of free markets and the protection of private property. Other studies look at individual choice, with greater economic freedom coming from a larger set of alternatives available. Yet other studies put economic freedom in the context of distributive justice and freedoms afforded by all.

In the most commonly used sense, economic freedom includes the fundamental right of every human to control his or her own labor and property – to work, produce, trade, consume and invest. In economically free countries, these rights are protected by the government and unconstrained by the government. Governments in economically free societies allow labor, capital and goods to move freely. The rule of law, property rights, freedom of contract, external and internal openness of markets, protection of property rights, and freedom of economic initiative are all associated with such societies.

The basic principles emphasized in the Index of Economic Freedom are individual empowerment, equitable treatment and the promotion of competition. 10 benchmarks are employed to rank 185 countries around the world. The 10 indicators are grouped in four broad categories: Rule of Law (property rights, freedom from corruption;) Limited Government (fiscal freedom, government spending;) Regulatory Efficiency (business freedom, labor freedom, monetary freedom;) and Open Markets (trade freedom, investment freedom, financial freedom.) They are assigned a grade (0 indicating the least freedom and 100 the maximum) and averaged to give an overall score.

For a complete listing of the sub-categories in each indicator, see http://www.heritage.org/index/faq , Q.3. The Heritage Foundation has written about its index that it “provides strong evidence that the countries that maintain the freest economies do the best job promoting prosperity for all citizens.” Its proponents say the data suggests that economic freedom correlates with promoting human development, reducing poverty and protecting the environment and also with higher living standards, literacy, life expectancy, economic growth, income equality and self-reported happiness, and with less corruption and less political violence.

The field of economic freedom research, and the Index of Economic Freedom in particular, are not without their critics. They point out that “correlation” is not “causation,” and that there may be other reasons for the findings, but also take issue with the correlation itself, pointing out that in the recent recession one-half of the 10 hardest-hit countries in the world were listed among the 30 “free” and “mostly free” economies at the top of the ranking. Critics also suggest that the concept is too narrowly defined and oppose the inclusion of some business-related measures like corporate charters and intellectual property protection. They also point to the recent strong growth of the Chinese economy as evidence of a lack of correlation between economic freedom and economic growth. Finally, skeptics of this kind of indeces argue that the studies, coming from a free-market viewpoint, assume that what is good for investors or employers is, by definition, “good” in the absolute sense, while pointing out that the same factors that enhance “freedom” for an employer (e.g., to hire workers at low wages) may undermine economic freedom for employees (e.g., to work at a job without suffering poverty.)

Watch the presentation of the 2013 Index of Economic Freedom in Hong Kong.

The Heritage Foundation's 2013 Index of Economic Freedom

Hong Kong, Singapore, Australia, New Zealand and Switzerland comprise the 2013 edition’s top-five (based on 2012 data.) The United States is tenth and the United Kingdom fourteenth. North Korea is last, preceded by Cuba, Zimbabwe and Venezuela. The index has been remarkably stable through the years, with some variations but only within the range of + or – 5 points for scores out of a 100. Hong Kong and Singapore have occupied the top two positions for 19 straight years.

According to the Index editors, “The global advance toward economic freedom has ground to a halt.” The report notes that the 2013 world average score, 59.6, is just one-tenth of a point above 2012 data. In this latest edition of the index, Georgia is the world’s most improved country, with a score that rose 2.8 points over the previous year. Belize’s score dropped the most, instead, a negative 4.6 points.