ECONOMIC FREEDOM OF THE WORLD REPORT 2001-2010

More than 70 economic research institutes and liberal think-tanks joined the initiative of the Fraser Institute, including the Liberal Institute of the Friedrich Naumann Foundation for Liberty in Potsdam which publishes the Economic Freedom Report annually in Germany.

Based on findings in the report published by the Fraser Institute in Vancouver the Friedrich Naumann Foundation has supported and continuously encouraged the development of the "Economic Freedom Network Asia" to enable a wider discussion of necessary policies and framework for economic growth also as a pre-condition for poverty eradication. EFN Asia, consisting of think tanks and research institutes from more than 20 Asian countries, cooperates to further develop the Economic Freedom Index in Asia; analyse the economic development, strengths and weaknesses of Asian countries in comparison with other regions.

Knowing what to measure and how to measure it simplifies a complex issue. Economic freedom cannot simply be counted: freedom is a quality rather than a quantity. In order to measure economic freedom, the focus is on ‘ordinal' rather than ‘cardinal' measures of freedom.

In line with the vision of Milton Friedman and Gary Becker, the Fraser Institute developed the Economic Freedom of the World (EFW) index, providing a comparison between countries, ranked according to their level of economic freedom. The EFW index is the compilation of several indicators, including

Size of Government: The level of government expenditures, taxes and enterprises indicates the size of the government and the extent of the individual's role and capacities in a market economy. The larger the government size, the smaller the level of personal choice of the individual and the smaller the reach of economic freedom.

Legal Structure and Security of Property Rights: Freedom is rooted in ownership: without the rule of law protecting private property rights, a market order is meaningless. The protective function of government is a composite of the security of property rights, enforcement of contracts and fair and peaceful settlement of disputes.

Access to Sound Money: Money serves three vital functions: a medium of exchange, a unit of account and a store of value. A sound money system heightens the efficiency of the market economy. Access to sound money is measured by money growth, inflation and freedom to own foreign currency bank accounts.

Freedom to Trade Internationally: Evidence shows that voluntary exchange is a positive-sum game. Throughout history however states have imposed a wide array of constraints on international trade. Tariffs, quotas, hidden administrative constraints, and exchange rates and capital controls are imposed which impede international exchange, subsequently reducing economic freedom.

Regulation of Credit, Labour and Business: State regulations, especially in the credit market, labour market and business, are the major obstacles to the freedom of the individual's economic activities.

2010                                  2009