Singapore has emerged as the world’s freest economy, surpassing Hong Kong for the first time in the history of the Economic Freedom of the World Index. The report, released by the Canadian think tank Fraser Institute, reveals a significant shift in rankings, with Hong Kong slipping from the coveted number one position. This development marks a turning point in the global economic landscape, as Singapore takes the reins as the freest economy in the world.
The Measure of Economic Freedom
The Economic Freedom of the World Index assesses several key factors to determine the level of economic freedom in a country. These factors include ease of international trade, freedom to enter and compete in markets, and business regulations, among others. The findings in the 2023 report are based on data from 2021, providing a comprehensive overview of the economic freedom enjoyed by individuals across 165 jurisdictions.
The report identifies some crucial reasons for Hong Kong’s decline in economic freedom. New regulatory barriers, increasing business costs, and limitations on employing foreign labor have all contributed to the erosion of Hong Kong’s ranking. The government’s efforts to control the private sector have further exacerbated the situation, leading to a significant reduction in economic freedom. As a consequence, Hong Kong’s once-thriving economy is likely to suffer.
Fraser Institute’s senior fellow, Matthew Mitchell, highlights the interconnection between economic freedom and civil and political freedom. Hong Kong’s recent decline serves as a prime example of this relationship. The introduction of China’s national security law in 2020, seen by critics as an infringement on Hong Kong’s autonomy, has had far-reaching consequences. The law imposes severe penalties, including life imprisonment, for crimes of secession and sedition. This curtailment of civil and political rights has inevitably resulted in a decrease in economic freedom.
Singapore’s Rise to the Top
Meanwhile, Singapore’s ascent to the number one position is attributed to improvements in its size of government and regulation components. The country’s overall score has seen a slight increase, allowing it to surpass Hong Kong. Singapore’s commitment to an open and business-friendly environment has contributed to its success in fostering economic freedom.
The report also highlights other notable countries in terms of economic freedom. Switzerland, New Zealand, and the United States occupy the third, fourth, and fifth positions respectively, showcasing their commitment to economic liberalism. The United Kingdom secures the sixth spot, while Japan and Germany claim the 20th and 23rd positions, respectively.
Singapore’s rise to the top of the Economic Freedom of the World Index signifies a significant shift in global economic rankings. Hong Kong’s decline serves as a warning sign of the consequences of limiting economic freedom, demonstrating the close connection between economic, civil, and political freedom. As countries around the world strive to recover and rebuild their economies, fostering economic freedom becomes increasingly crucial. The success of Singapore and other top-ranked nations provides valuable insights into the benefits that can be reaped from embracing an environment conducive to economic growth and innovation.