IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
According to the 2011 Index of Economic Freedom released by the Heritage Foundation and The Wall Street Journal, European nations continue to enjoy a great degree of economic freedom. But while three of the 10 freest economies in the world are European, only one – Switzerland, at No.5 – is rated as truly “free.”
The other top-10 finishers, Ireland and Denmark, are rated “mostly free.” Yet some of the region’s recent “stars,” such as Ireland and Iceland, generated lower scores as they reduced economic freedom to deal with fiscal turmoil. Iceland fell 5.5 points – the most of any country in the world. Ireland, Italy, Greece and the United Kingdom all dropped by two points or more. “Taken as a whole, the region continues to enjoy economic prosperity and stability,” wrote the editors of the Index. “But its welfare states, where social programs consume a large percentage of GDP and labor regulations hinder productivity and job creation, continue to slow down the continent’s potential for progress.” The Index, compiled as a joint project of The Heritage Foundation and The Wall Street Journal, ranks countries on a 1-100 scale in 10 categories that evaluate openness, the rule of law and competitiveness. The first place in the rating is, since several years, held by Hong Kong.