Ranked ‘mostly unfree’, India, China spurred Asia-Pacific growth

WASHINGTON - Asia-Pacific’s two largest economies - India and China - were ranked as “mostly unfree”, as Hong Kong and Singapore finished 1-2 and North Korea ended dead last in an Index of Economic Freedom rankings released Wednesday.

In fact, the Asian Pacific region boasted the world’s four freest economies, according to the index prepared by The Heritage Foundation, a conservative US think tank and The Wall Street Journal.

Australia finished third despite a 0.1 drop in its overall score. New Zealand finished fourth, and had the world’s best scores in two of the 10 Index categories: business freedom (99.9 out of 100) and freedom from corruption (94).

Though ranked “mostly unfree” with 17 other smaller states in the region, the Index editors credited India and China for spurring nearly 8 percent growth in the regional economy last year, primarily through their commitment to robust trade.

Both nations, they note, “have taken good advantage of opportunities available as a result of improvements in global economic freedom, especially in the area of trade”.

Hong Kong led the world in four categories of economic freedoms: business freedom (98.7), fiscal freedom (93.3), investment freedom (90) and property rights (90).

Singapore actually gained ground on the strength of its world-best score in labour freedom (98) and moved closer to the top spot with a 1.1-point improvement this year.

Income disparities exist in all regions, but the difference in quality of life between countries that embrace economic freedom and those that don’t is never more pronounced than in this region.

Per capita gross domestic product in the five top-rated countries is nearly 15 times greater than that of the bottom five, where average earners take home only $3,042 per year.

The Index ranks countries on a 1-100 scale on the basis of 10 measures that evaluate openness, the rule of law and competitiveness. The 10 scores then are averaged to produce the overall score.

The Asia-Pacific region performs above the world average on only three of the 10 economic freedoms: fiscal freedom, government spending and labour freedom, the Index noted.

But corruption, murky property rights and limited progress on investment and financial freedom continue to plague the region.

“Asian countries could make the most progress by strengthening their banking and investment institutions and by enhancing transparency and corporate governance,” the editors wrote.

(Arun Kumar can be contacted at arun.kumar@ians.in)