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Press Release: Economic Freedom of the World Index 2017

Pakistan ranks 127 out of 159 countries according to the Economic Freedom of the World 2017 Annual Report

PESHAWAR, PAKISTAN Alternate Solutions Institute, a pioneer economic policy research and advocacy think tank in Pakistan is pleased to release the Economic Freedom of the World: 2017 Annual Report jointly with Fraser Institute Canada. The report ranked Pakistan on 127 out of 159 countries and territories.

Last year, Pakistan ranked 137.

Pakistan has improved its global position and ranking in economic freedom, climbing up 10 places since the last year, but a closer look shows decline in legal system and property rights, freedom to trade internationally and size of government component while a slight betterment in access to sound money and Regulation of credit, labor and business. Although, Pakistan still stands with the countries having limited rights of economic freedom.

Hong Kong and Singapore again top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, Ireland, the United Kingdom, Mauritius, Georgia, Australia and Estonia round out the top 10.

Pakistan's neighbouring countries show a place ahead in the region from the country such as India stands at 95, Bangladesh 117, Sri Lanka 94, Malaysia 65, Indonesia 73, Turkey 81, and Nepal 107 while Myanmar stands at 151.

The 2017 report was prepared by James Gwartney, Florida State University; Robert A. Lawson, Southern Methodist University; and Joshua Hall, West Virginia University.

It's based on data from 2015 (the most recent year of available comparable data) and measures the economic freedom (levels of personal choice, ability to enter markets, security of privately owned property, rule of law, etc.) by analysing the policies and institutions of 159 countries and territories.

This year, for the first time, the ranking is adjusted for gender equality. In countries where women are not legally accorded the same level of economic freedom as men, that country receives a lower score.

While launching the report Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute said "Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives". He elaborated "The link between economic freedom for all citizens and the prosperity they enjoy is undeniable, while the lowest-ranked countries are usually burdened by oppressive regimes that limit freedom and opportunity".

The 10 lowest-ranked countries are: Iran, Chad, Myanmar, Syria, Libya, Argentina, Algeria, the Republic of the Congo, the Central African Republic and Venezuela. Some countries such as North Korea and Cuba can't be ranked due to lack of data.

Other notable rankings include the United States and Canada, which tied at 11th, Germany (23), Japan (39), France (52), India (95), Russia (100), China (112) and Brazil (137).

According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.

For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$42,463 in 2015 compared to US$6,036 for bottom quartile nations.

Moreover, the average income in 2015 of the poorest 10 per cent in the most economically free countries (US$11,998) was almost twice the overall average per capita income in the least free countries. And life expectancy is 80.7 years in the top quartile of countries compared to 64.4 years in the bottom quartile.

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 nations and territories. It's the world's premier measurement of economic freedom, measuring and ranking countries in five areas: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business. See the full report at www.fraserinstitute.org/economic-freedom.

Pakistan scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):

  • Size of government: Score went down to 7.86 from 7.88 in the last year's report. Size of government includes measures such as government consumption, subsidies, government investment and enterprises, and top marginal tax rate.

  • Legal system and property rights: decreased to 3.30 from 3.37. This indicator covers different measures like judicial independence, impartial courts, protection of property rights, legal enforcement of contract, and reliability of police.

  • Access to sound money: increased to 6.38 from 6.21, which include money growth, standard deviation of inflation, and freedom to own foreign currency accounts.

  • Freedom to trade internationally: declined to 5.77 from 5.82. It consists tariffs, regulatory trade barriers, black market exchange rate, and control of the capital and people.

  • Regulation of credit, labor and business: improved to 6.31 from 6.19. This component shows credit market, labor market, and business regulations.

"Pakistan has shown some improvement in its ranking in the Economic Freedom of the World Index 2017 report. This could be attributed mainly to the better performance in access to sound money, and regulation of credit market, labor market and business. While the report indicates decline in areas particularly the legal system and property rights, freedom to trade internationally and size of government. This trend shows a gloomy economic performance of the country. Pakistan needs to focus and improve protection of property rights, legal enforcement of contract, reliability of police, elimination of subsidies, and judicial independence" said Dr. Raza Ullah President of Alternate Solutions Institute. "Pakistan still stands amongst the least economically free countries and the report clubbed her with least developed African countries. Many of the South Asia nations have shown much improvement in economic freedom with an increase in per capita income, exports and GDP, case of Bangladesh and India indicates the same. Economic freedom is

a pre-requisite for growth, development, and broader human development and is a fundamental rights, which needs much attention" Raza further added.

About the Economic Freedom Index

Economic Freedom of the World measures the degree to which the policies and institutions of countries support economic freedom. This year's publication ranks 159 countries and territories. The report also updates data in earlier reports in instances where data has been revised. For more information on the Economic Freedom Network, datasets, and previous Economic Freedom of the World reports, visit www.fraserinstitute.org.



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