Nepal continues to be least free economy

Nepal continues to be one of the least economically free country, according to Economic Freedom of the World Report 2013.

The country slid to the 125^th position – with a score of 6.19 – out of 152 countries, whereas it stood at the 110^th – with a score of 6.33 – among 114 economies a year ago in 2012.

The report released here today by Samriddhi, The Prosperity Foundation, also revealed that the overall level of economic freedom has increased modestly around the globe, though it has not improved in Nepal but further deteriorated.

The poor ranking has been attributed to decrease in freedom to trade internationally and size of government, the annual Economic Freedom report that is measured by five indicators – government’s role in economic activities, access to sound money, freedom to international trade and regulations to govern credit, labour and business, and legal structure, including property rights –  using the data from two years back, revealed.

However, Nepal has improved, though marginally, in three indicators, while performed poorly in two indicators.

In terms of  ‘Size of government’, Nepal’s score decreased from 8.34 – out of 10 – a year ago to 7.6 this year, whereas in ‘Legal structures and security of property rights’, the country’s score increased from a year ago’s 3.85 to 4.2 this year. Likewise, access to sound money has increased slightly to 6.3 from 6.26 a year ago, it said, adding that the country’s score on Freedom to trade internationally has decreased from 6.74 a year ago to 6.4 this year. “The score on Regulation of credit, labour and business has also slightly increased to 6.5 from a year ago’s 6.47.”

India ranks 111^th –  with a score of 6.34 – while China ranks 123^rd – with
a score of 6.22 – but Hong Kong ranks first and the freest economy in the world – with a score of 8.97 – stated the report the showed that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms, and longer life spans.

The annual peer-reviewed Economic Freedom of the World report is produced by the Fraser Institute, Canada’s leading public policy think-tank, in cooperation with independent institutes in 80 nations and territories, which includes Samriddhi, The Prosperity Foundation as a partner institute from Nepal.

The Economic Freedom of the World Report uses 42 variables to construct a summary index and measure the degree of economic freedom of countries around the world.  The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property.

This year’s full report also constitutes two additional chapters on the importance of economic, political and civil institutions in human development and economic growth and the relation between economic freedom, democracy and life satisfaction.

Economic Freedom of the World 2013 Report
Top 10 freest economies
1. Hong Kong
2. Singapore
3. New Zealand
4. Switzerland
5. UAE

6. Mauritius

7. Finland

8. Bahrain
9. Canada
10. Australia

Bottom 10 least free economies
152. Venezuela
151. Myanmar
150. Republic of Congo
149. Zimbabwe
148. Chad

147. Angola

146. Central African Republic

145. Burundi

144. Democratic Republic of Congo

143. Algeria

The report states

• Nations that are economically free out-perform non-free nations in indicators of well-being

• Nations in the top quartile of economic freedom had an average per-capita GDP of $36,446 in 2011, compared to $4,382 for nations in the bottom quartile in 2011 US (PPP) dollars.

• In the top quartile, the average income of the poorest 10 per cent was $10,556, compared to $932 in the bottom quartile in 2011 US (PPP) dollars. Interestingly, the average income of the poorest 10 per cent in the most economically free nations is more than twice the overall average income in the least free nations.

• Life expectancy is 79.2 years in nations in the top quartile compared to 60.2 years in those in the bottom quartile.

• Political and civil liberties are considerably higher in economically free nations than in unfree nations.