The world's 10 freest economies

The level of economic freedom in the world has continued to grow over the last year, with 83 economies representing every region posting gains in the 15th annual Index of Economic Freedom, says a study jointly done by The Heritage Foundation and The Wall Street Journal.
And what are free economies? Well, economies classified as 'free' or 'mostly free' do a much better job in promoting human development, reducing poverty and protecting the environment. According to the study, economic freedom is strongly related to good economic performance.
Per capita incomes are much higher in countries that are economically free, says the study. Economies rated 'free' or 'mostly free' in the 2009 Index enjoy incomes that are more than double the average levels in all other countries, it adds.
The ten components of economic freedom are: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labour freedom. So which are the world's freest economies?
India
India ranks 123rd out of 179 countries in the list; and in placed under the category 'mostly unfree'. India's economic freedom score is 54.4.
The study says India continues to move forward slowly with market-oriented economic reforms. It highlights that India had achieved a growth of about 8 per cent over the past five years, and is a leader in information technology and business process outsourcing. It scores on government size, labour freedom, and property rights.
India could improve in business freedom, trade freedom, financial freedom, investment freedom, and freedom from corruption.
Foreign investment is overly regulated, and the judicial system is burdened by backlogs.
Public debt and fiscal deficit also continues to grow. Starting a business takes an average of 30 days in India. Corruption is rampant in India.
The tax rates are high. Inflation is moderately high, averaging 6.1 percent between 2005 and 2007.
Hong Kong
Hong Kong's economic freedom score is 90, making it the freest economy in the 2009 Index. The study sees improvement in fiscal, trade and business freedom.
Hong Kong is known for its openness to global trade and investment.
The study highlights the entrepreneurial activity in Hong Kong which leads to such prosperity.
One of the world's leading financial hubs, the country is known for transparent and efficient regulation of banking and financial services.
Hong Kong's tax rates are among the lowest in the world. Business regulation is straightforward, and the labour market is flexible.
Starting a business takes less than half the world average of 38 days. Inflation is low, averaging 1.9 per cent between 2005 and 2007.
Property rights are protected by an independent judiciary, says the The Heritage Foundation study.
GDP (PPP): $267.8 billion
Singapore
Singapore's economic freedom score is 87.1, making its economy the 2nd freest in the 2009 Index.
The index highlights Singapore's openness to global trade and investment.
The economy has seen a consistent growth rate averaging over 6 per cent in recent years. Singapore has an ideal business environment and high level of entrepreneurial activity.
Regulations are good and promote business. Commercial operations are conducted with transparency and speed. Corruption hardly exists in Singapore. Starting a business takes four days in Singapore.
Inflation is low, averaging 1.7 per cent between 2005 and 2007.
GDP (PPP): $200.5 billion
Australia
With economic freedom score of 82.6, Australia is the 3rd freest in the 2009 Index. Australia scores high in almost all of the 10 'economic freedoms'.
Monetary stability, openness to global trade, competitive financial and investment environment are the highlights of Australia's strong economy.
Property rights are well protected, businesses enjoy flexibility in their licensing, regulation, and employment practices. Starting a business takes only two days.
Australia has a moderate corporate tax rate. Inflation stands at an average of 2.7 per cent between 2005 and 2007. Corruption is minimal.
GDP (PPP): $735.9 billion
Ireland
Ireland is the 4th freest in the 2009 Index with a economic freedom score of 82.2. Ireland's economy is open to global trade and investment.
It has an efficient business environment, attract huge foreign investment. Ireland scores high on financial freedom and freedom from corruption.
Financial markets are transparent. Property rights are protected by an efficient, independent judiciary. The corporate tax rate is a competitive 12.5 per cent.
Starting a business takes an average of 13 days in Ireland. Inflation stands at a low of 2.8 per cent between 2005 and 2007.
GDP (PPP): $171.9 billion
New Zealand
New Zealand, one of the most prosperous economies comes at the fifth position with an economic freedom score of 82.
The economic liberalisation in the 1980s and 1990s had deregulated its economy.
New Zealand's economy gets its boost from the agricultural sector, a strong manufacturing base and booming tourist industry.
Starting a business is very easy here, it just takes a day! Inflation is at 2.7 per cent between 2005 and 2007. However, New Zealand has high tax rates.
GDP (PPP): $106.8 billion
United States
The world's largest economy is ranked 6th in terms of economic freedom with a score of 80.7.
The US economy strength lies in business freedom, investment freedom, financial freedom, property rights, freedom from corruption, and labour freedom.
The regulatory and legal framework boosts entrepreneurship. Financial markets are open to foreign competition and are dynamic and modern.
The judiciary is independent and of high quality. The economy lags in fiscal freedom and government size. Corporate and personal taxes are high. But starting a business takes only six days.
Inflation is low, averaging 3.0 per cent between 2005 and 2007.
GDP (PPP): $13.2 trillion
Canada
Canada scores very high in eight of the 10 'economic freedoms'.
It leads in business freedom, property rights, and freedom from corruption. The process for conducting a business is transparent and offers a good environment for entrepreneurial activity.
Canada lags behind the world average only in size and expense of government. Canada has elaborate social and welfare state programs that raise government's expenses.
Starting a business takes an average of five days, Canada has moderate tax rates. Inflation is low, averaging 2.1 per cent between 2004 and 2006.
GDP (PPP): $1.2 trillion
Denmark
Denmark is the 8th freest economy in the 2009 Index. With a economic freedom score of 79.6, Denmark scores high on eight of the 10 components of economic freedom.
The economy is open to foreign investment and trade. The regulations are transparent and efficient. Denmark also has an efficient and independent judiciary.
While the corporate tax rate is one of the lowest among members of the European Union, personal income taxes are very high, and the overall tax burden is significant, states the study.
There are few state-owned industries, but government spending equals over 50 percent of GDP. Starting a business takes an average of six days. Inflation is low, averaging 1.8 per cent between 2005 and 2007.
GDP (PPP): $194.0 billion
Switzerland
One of the world's richest and most investment-friendly nations, Switzerland has a economic freedom score of 79.4, making its economy the 9th freest in the 2009 Index.
Switzerland has one of the most competitive and flexible economies in the world. It boasts of an efficient business environment and high entrepreneurial activity.
The labour market is flexible. Switzerland has highly developed and well-regulated financial institutions. The economy is open to foreign investment and restriction apply only to few sectors.
The judiciary is independent and reliable. Starting a business takes 20 days here. Inflation is very low, averaging 0.9 per cent between 2005 and 2007
GDP (PPP): $278.6 billion
United Kingdom
The United Kingdom's economic freedom score is 79, making its economy the 10th freest in the 2009 Index. The economy is open to global trade and investment.
It scores very high on investment freedom, financial freedom, property rights, business freedom, freedom from corruption, labour freedom and trade freedom.
The average tariff rate is low and regulation is efficient. There are few restrictions on foreign investment. The financial system is well developed and the judiciary is independent and reliable.
Property rights are well enforced and contracts are secure. The UK ranks below the world average only in fiscal freedom and government size.
The disadvantage here is the high income tax. Starting a business takes 13 days. Inflation is low, averaging 2.3 per cent between 2005 and 2007.

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