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Singapore is world's most free economy: US think-tank


WASHINGTON - Singapore's economy has been ranked the most free in the world this year in the Heritage Foundation's 2021 Index of Economic Freedom, the second year in a row it topped the list.

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The Republic scored 89.7 points, with its overall score having increased by 0.3 points from 2020, primarily because of an improvement in points gained for government spending, the conservative Washington think-tank said on Thursday (March 4).

Singapore's score placed it far ahead of both the regional average for 40 countries in the Asia Pacific (60.2) and the world average (61.6).

It was followed in the rankings by New Zealand, Australia, Switzerland and Ireland, in that order, with scores ranging from 83.9 (New Zealand) to 81.4 (Ireland).

The United States ranked 20th with a score of 74.8, and Germany was 29th with a score of 72.5. Thailand took the 42nd spot with a score of 69.7, and China was No. 107 with a score of 58.4.

Hong Kong, which had topped the list for 25 of the last 26 years, was left out of this year's Index, as it has come under the direct control of Beijing, the Heritage Foundation said.

The city's ties to Beijing are increasingly "forged in steel" and "traditions of English common law, freedom of speech, and democracy have weakened significantly", Dr Edwin J. Feulner, founder of the Heritage Foundation, wrote in the Wall Street Journal on Wednesday.

"The loss of political freedom and autonomy suffered by Hong Kong over the past two years has made that city almost indistinguishable in many respects from other major Chinese commercial centres like Shanghai and Beijing," he added.

The Index ranks 12 indicators under four categories: rule of law, size of government, regulatory efficiency, and open markets.

"Singapore remains the only country in the world that is considered economically free in every 12 Index category," Mr Anthony Kim, research manager at the Heritage Foundation and editor of the Index, told The Straits Times.

"The foundations of Singapore's economic resilience and competitiveness include strong protection of property rights and effective enforcement of anti-corruption laws," he said.

"Efficient government provides good public services with low tax rates. The regulatory environment is flexible and transparent, encouraging vibrant commercial activity.

"A strong tradition of openness to global trade and investment has long boosted productivity while facilitating the emergence of a more dynamic and competitive financial sector."

In addition, Singapore has, over the years, been storing or reserving "relatively ample policy space to be flexible and resilient thanks to its high degree of competitiveness, whether through monetary or fiscal policy tools", Mr Kim added.

The broader Asia Pacific scored lower than the world average in seven of 12 indicators: property rights, judicial effectiveness, government integrity, monetary freedom, trade freedom, investment freedom, and financial freedom.

But in other areas - tax burden, government spending, fiscal health, business freedom, and labour freedom - the Asia Pacific exceeded world averages, the report said.

Also, citizens of free or mostly free countries "enjoy incomes that are more than double the global average and more than six times higher than in repressed economies", the report said.

The more economically free a society, the longer people live healthier lives, alongside higher access to quality social goods such as education, healthcare, and a cleaner environment, it added.

The findings "confirm the importance of economic freedom in promoting rapid growth and sustainable social progress", it said.

Published : March 05, 2021

By : Nirmal Ghosh The Straits Times/ANN