Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of privately owned property.
A global effort has been devoted to reducing world poverty. Some claim poverty can be best combated by foreign aid. Others point to the importance of domestic policies, such as those that support or weaken economic freedom. In new research published in this year’s report, Seth Norton and James Gwartney investigate the connection between economic freedom and poverty. Using various measures of poverty, Norton and Gwartney find a strong positive relationship between economic freedom and poverty reduction and call for more research in this area.
This year's report notes that economic freedom remains on the rise. The average economic freedom score rose from 5.46 (out of 10) in 1980 to 6.65 in the most recent year for which data are available. Of the 102 nations with chain-linked scores going back to 1980, 89 saw an improved score and 13 saw a decrease. In this year’s index, Hong Kong retains the highest rating for economic freedom, 8.94 out of 10, followed by Singapore, New Zealand, Switzerland, United Kingdom, Chile, Canada, United States, Australia, and Ireland.
The first Economic Freedom of the World report, published in 1996, was the result of a decade of research by a team which included several Nobel Laureates and over 60 other leading scholars in a broad range of fields, from economics to political science, and from law to philosophy. This is the 12th edition of Economic Freedom of the World. This year's publication ranks 141 nations for 2006, the most recent year for which data are available.