2016-IEF

2016 Index of Economic Freedom

The Index of Economic Freedom has provides an economic policy road map for countries that aspire to greater economic dynamism and prosperity. As the Index has documented over the past 22 years, lasting prosperity is a result of a persistent commitment to limited government, strong private property rights, openness to global trade and financial flows, and sensible regulation. Together, these interrelated factors have been proven to empower the individual and induce dynamic entrepreneurial activity.

The 2016 Index of Economic Freedom found that economies rated “free” or “mostly free” enjoy incomes that are over twice the average levels in all other countries and more than four times higher than the incomes of “repressed” economies. People in economically free societies live longer and have better health. Nations that have focused on improving their competitiveness and opening their societies to new ideas, products, and innovations have done a much better job of achieving high levels of social progress. Global economic freedom has advanced for the fourth year in a row – the global average economic freedom score of 60.7 is the highest recorded in the 22-year history of the Index.

The erosion of economic freedom was most pronounced in labor freedom. The average global labor freedom score fell by 1.6 point, reflecting still-stagnant employment conditions around the world as well as the pressing necessity of enhancing the flexibility of labor markets. Declining economic freedom was reported in 74 countries, including 19 advanced economies such as the United States, Japan, and Sweden.

Six countries recorded no score change. The United States continues to be mired in the ranks of the “mostly free,” the second-tier economic freedom category into which the U.S. dropped in 2010. Worse, with scores in labor freedom, business freedom, and fiscal freedom notably declining, the economic freedom of the United States plunged 0.8 point to 75.4, matching its lowest score ever.

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