Sunday, September 18, 2016

India's economic freedom rank, at 112, better than China, Brazil: Fraser Institute report based on 2014 data

By Our Representative
Well-known Canada-based Fraser Institute's "Economic Freedom of the World (EFW) 2016 Annual Report" has ranked India No 112 among 159 countries and territories in its latest EFW ranking, better than two major peer countries, China (No 113) and Brazil (No 124).
The report uses 2014 data, when the Narendra Modi government came to power.
The other two peer countries of the BRICS nations – South Africa and Russia – are found to perform better than India, 105th and 102nd, respectively. BRICS stands for Brazil, Russia, India, China and South Africa.
The 320 page report, released last week, says insists that if low-income countries “adopt policies more consistent with economic freedom, convergence will occur and the income gap decline.” It believes, “The gap in economic freedom between the rich and poor nations of the world narrowed and so too did the income gap.”
“After two centuries of expanding income inequality, the trend has reversed. Worldwide, income inequality is now declining”, it claims, adding, “Xavier Sala-i-Martin of Columbia University and Maxim Pinkovskiy of the Federal Reserve Bank of New York examined the data on this issue in great detail.”
The report insists, “To a large degree, these trends were driven by the rapid growth of populous countries, particularly China and India. While the ranking of both is still low, the EFW rating of China has increased substantially since 1980 (and India’s rating since 1990).”
Pointing out that “conceptually, economic freedom is present when economic activity is coordinated by personal choice, voluntary exchange, open markets, and clearly defined and enforced property rights”, the report measures its EFW rating on the basis of five major areas: size of government, legal system and security of property rights, sound money, freedom to trade internationally, and regulation.
Interesting, in the size of government, India ranks quite high, 8th, in legal system and property rights it ranks 86th, in sound money it ranks 130th, in freedom to trade internationally it ranks 144th, and in regulation it ranks 132nd.
Providing a few more rankings, the report finds that in credit market regulations it ranks 139th, in labour market regulations it ranks 99th, and in business regulations it ranks 73rd.
Hong Kong and Singapore occupy the top two positions, the report says. The other nations in the top 10 are New Zealand, Switzerland, Canada, Georgia, Ireland, Mauritius, the United Arab Emirates, and Australia and the United Kingdom, tied for 10th, it adds.,
Other major countries’ rankings are the United States (16th), Germany (30th), Japan (40th), South Korea (42nd), France (57th), Italy (69th), Mexico (88th).
The report believes, “Nations that are economically free out-perform non-free nations in indicators of well-being nations in the top quartile of economic freedom had an average per-capita GDP of $41,228 in 2014, compared to $5,471 for bottom quartile nations (PPP constant 2011 US$).”
“In the top quartile, the average income of the poorest 10% was $11,283, compared to $1,080 in the bottom quartile in 2014 (PPP constant 2011 US$)”, the report says, adding, “Interestingly, the average income of the poorest 10% in the most economically free nations is twice the average per-capita income in the least free nations.”
Taking the same logic forward, the report says, “Life expectancy is 80.4 years in the top quartile compared to 64.0 years in the bottom quartile. Political and civil liberties are considerably higher in economically free nations than in unfree nations.”
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Click HERE to download report

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