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Estonia is First Developing Country To Reach Top Ten in Economic Freedom


Washington's non-government Cato Institute Friday released its annual report on economic freedom, in which it uses several indicators to rank 141 global economies. VOA's Barry Wood reports the surprise in this year's report is the accession of a former communist economy, Estonia, to number eight position.

As in previous annual surveys, economic freedom is highest in Hong Kong, Singapore, New Zealand, Switzerland, the United States and Britain. But report author James Gwartney, an economics professor at Florida State University, says Estonia's extraordinary progress vaulted it into the top ten.

"It's a country that has been amazing progress in economic freedom in a relatively short period of time. In 1995, in the index for that particular year, Estonia was something like 70th or 71st. And now it has moved all the way up to eighth," he said.

Estonia was part of the Soviet Union until 1991. The least economically free country is Zimbabwe, which just edged out Burma. Data was not available for Cuba and North Korea.

The survey employs several indicators to measure economic freedom. These include five broad categories: the size of government, the rule of law, access to sound money, openness to trade, and regulation of business and labor. Gwartney elaborates on how the rule of law component is factored in.

"The second area is the legal structure and protection of property "And, as I mentioned, we rely on upon data on the security of property rights, the independence of the judiciary system, how difficult it is to enforce contracts," he said.

Gwartney and the Cato Institute say economic freedom globally has been improving over the past decade. They say that China and India have made great strides in economic freedom. Kenya and Ghana have made significant recent advances.

The World Bank also is active in assessing economic freedom. Its recent publication, Doing Business 2008, measures the ease of doing business in 178 economies. The bank examines specific measures of conducting commerce like starting a business, employing workers, registering property, getting credit, paying taxes and trading across borders.

Simeon Djankov, principal author of the report, specifies the highest ranked economies. "You see some patterns: Transition economies (do best): Croatia at number two, Macedonia at number four, Georgia at number five, Bulgaria-my own country-at number ten," he said.

Egypt, says Djankov, is the top reforming economy of 2006/2007, the latest years for which data is available. He says despite improvements in a few countries, worldwide Africa remains the hardest place to do business.

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