An increase in spending coupled with a decrease in tax revenue caused the United States to drop among the world’s freest economies, a survey released yesterday showed, but the country remains among the top 10 open economies globally.
Hong Kong topped the list as the freest economy for the 10th consecutive year, while North Korea ranked last among the 155 nations polled. Singapore ranked second and New Zealand third.
“The administration of George W. Bush has taken a leadership role in both free trade and reducing domestic tax rates — Overall, the United States remains one of the world’s freest and most vibrant economies,” said the 2004 Index of Economic Freedom, which ranked the United States 10th, down four places from last year’s poll.
Published each year by the Heritage Foundation and the Wall Street Journal, the study measures the openness of world economies according to 10 factors, such as monetary policy, government intervention in the economy and fiscal burden, which measures how much a government taxes and spends.
“Domestically, the top marginal tax rates for individuals have been reduced several percentage points, and the partial elimination of double taxation on dividends leaves corporations less reliant on debt financing, and therefore less vulnerable to economic downturns,” the report said.
The report said nearly nonexistent inflation and low interest rates continue to help the United States to achieve a good ranking.
Six European countries are among the top 10 freest economies, led by Luxembourg (fourth), Ireland (fifth), United Kingdom (seventh) and Switzerland (ninth). Germany ranked 18th; Italy, 26th; and France, 44th.
“During the last seven years, countries that have done the most to improve their scores on the Index’s 10 measures of economic freedom have, in general, experienced the highest rates of economic growth,” a Heritage statement read.
North Korea reached the last position as the most repressed economy.
“Without a viable and functioning economy, the [North Korean] regime has chosen to dedicate its international trade to such illegal activities as arms sales, counterfeiting, and the traffic in drugs and human beings,” said the report. It adds that this country makes more money from illegal drugs than from legitimate business.
Venezuela (147th), Iran (148th) and Libya (154th) are also among the 10 most closed economies of the world.
Polling in Angola, Burundi, Congo, Sudan and Iraq were suspended for this year’s study because of the state of civil unrest and anarchy of these countries, the press statement said.
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