Economic freedom in the Asia-Pacific

The Asia-Pacific is the region in which trade has developed most freely. Its progress has been energized by countries that have achieved great openness, even as others have been slower to open up. Chile is ranked eleventh on the Heritage Foundation’s 2009 Index of Economic Freedom.

The report ranks nations by their ability to promote free trade within their domestic economies and how much they have opened same to the outside world. The 2009 list includes 183 countries. The Heritage Foundation is a leading, conservative research center and strong supporter of neoliberalism.

The 2009 report

The Index of Economic Freedom offers a formula for measuring economic growth based on the tenets of classical liberal theory, which include a belief in the self-made man and markets as engines of development.

The ranking is based on 10 measuring points, which Heritage calls economic freedom components. The points are listed as follows: Business Freedom, Trade Freedom, Fiscal Freedom, Government Size, Monetary Freedom, Investment Freedom, Financial Freedom, Property Rights, Freedom from Corruption and Labor Freedom.

In general terms, the index indicates that each region has at least one of the top 20 freest economies. Of these, 10 are European, led by Ireland, Denmark, Switzerland and the UK. Another five are in the Asia-Pacific region, and two (U.S. and Canada) are in North America. The other regions are represented by one country each: Chile (South and Central America and Caribbean region), Mauritius (Africa region) and Bahrain (Middle East / North Africa Region).

A significant finding is that four Asia-Pacific economies lead the world in terms of economic freedom. In fact, Hong Kong has led the list for all 15 years in which the index has been published.

Asia-Pacific

The index indicates that the Asia Pacific region has a wide spectrum in its levels of economic freedom. On the positive side, Hong Kong leads the list, with Singapore in a close second. Australia moved up one place to third in 2009, while New Zealand remains fifth. Japan placed 19th.

But these cases are in strong contrast to Turkmenistan, Bangladesh and Burma, which Heritage characterizes as repressed economies, due to State restrictions on trade. North Korea is at the bottom of the rankings because it remains committed to socialist, autocratic rule. South Korea, however, placed 40th.

The region has shown itself to be a leader on issues such as government size and labor freedom, though Heritage feels that many of the small Pacific island economies have not progressed far enough on the latter issue. As regards shortcomings, investment freedom, financial freedom, property rights and corruption measures seem to be Asia’s weak points. According to the report, "Asian countries can make further progress by strengthening their banking and investment institutions, as well as improving transparency and corporate government."

As for the ranking’s leading countries, Hong Kong stands out in all 10 categories. Singapore ranked first on freedom of employment due to its progress on the issues of private sector grants, hiring flexibility and the firing workers. New Zealand, for its part, sets the standard for transparency and anti-corruption efforts.

One positive point, however, is that despite everything there is a slow, steady improvement in the giants, especially in the cases of India (132nd) and China (135th).

Latin America’s contradictions

The Latin American and Caribbean countries also had a wide spectrum of results. Rankings ranged from the "prosperous" Chile and the development of the Brazilian "colossus" to the small economies of the Caribbean.

Chile is among the top twenty at ranking number 11. Other Latin American countries included El Salvador (33rd), Mexico (49th), Peru (57th) Brazil (105th), Bolivia (130th) and Argentina (138th).


The region’s nations are distributed throughout the rankings more evenly than any other region. They are similar to a bell curve, in fact. All but six countries received an economic freedom score with in the 50-70 range. Nearly half were ranked in the center of the category at "moderately free."

The region is defined as one of the most economically diverse. Many countries are progressing strongly due to liberalization, while other nations are moving away from these principles. The report refers to these governments as populist administrations.

Latin American countries have performed better than the global average in four of the ten economic freedom indicators, however. Issues such as taxes, limited government, freedom of trade and investment are addressed better than in other parts of the developing world.

Weak areas included corruption, failure to protect property rights, poor governance and weak rule of law.