Nepal still one of the least economically free countries in the world

Nepal is still one of the least economically free countries in the world, according to an international report.

Nepal continues to be one of the least economically free countries ranking 126 out of 152 countries with an overall score of 6.16, which is slightly lower than last year's score, the annual Economic Freedom of the World report 2014 revealed. Nepal ranked 125 with a score of 6.19 last year.

The report released today in Brussels concluded that Nepal's scores reveal weaknesses in Legal System and Property Rights, Labour Market Regulations and Regulatory regime for trade and business.

The report measures the economic freedom – including levels of personal choice, ability to enter markets, security of privately owned property, and rule of law – by analysing the policies and institutions of 152 countries.

Lower level of economic freedom could be attributed as a reason behind's Nepal's inability to catch up with other developing nations which are experiencing higher levels of economic growth owing to reforms that make it easier to trade and do business.

The peer-reviewed report that uses the data of two years back is released annually. Therefore, the 2014 report provides ratings for the year 2012, the most recent year for which comprehensive data is available.

Nepal showed mixed performance in regards to all the five measured areas of economic freedom in the 2014 report. Though its ranking and scores in some of the areas have improved, Nepal’s overall performance in terms of economic freedom continues to be low.

Nepal scored less in two of the five key areas of economic freedom. Under size of government Nepal's score decreased from 7.6 in the previous year to 7.4 this year. Likewise, under regulation of credit, labour and business, the country's score slightly decreased from 6.5 in previous year to 6.4 this year.

However, under legal structures and security of property rights, the score remained unchanged at 4.2, and freedom to trade internationally, the score unchanged at 6.4, whereas under access to sound money, the score increased slightly from 6.3 in the previous year to 6.4 this year, the report added. "The score is awarded from 1 to 10, where a higher value indicates a higher level of economic freedom and a higher ranking."

The Fraser Institute – Canada's top ranked think tank – produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 90 nations and territories.

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. Economic freedom is measured in five different areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labour, and business.

According to the report, Hong Kong, once again, is the most economically free jurisdiction in the world followed by Singapore, New Zealand, Switzerland, Mauritius, United Arab Emirates, Canada, Australia, Jordan and (tied for 10th) Chile and Finland.

Likewise, the report, based on 2012 statistics (the most recent year of available data), the US that was once considered a bastion of economic freedom now ranks 12th in the world, tied with the UK, whereas Japan (23rd), Germany (28th), Russia (98th), India (110th) and China (115th) are some of the economically free countries.

However, the 10 lowest-ranked countries are Myanmar, Democratic Republic of Congo, Burundi, Chad, Iran, Algeria, Argentina, Zimbabwe, Republic of Congo and Venezuela, which retains the title of the world’s least economically free country.

Some despotic countries such as North Korea and Cuba could not be ranked due to lack of data.

Globally, the average economic freedom score dropped slightly to 6.84 out of 10 from 6.87 last year.

Like previous years, Samriddhi Foundation – one of the co-publishers of the report – has released the report in Nepal this year. The report demonstrates a strong link between economic freedom and prosperity whereby the most economically free countries have shown to offer the highest quality of life and personal freedoms.