Index of Economic Freedom

Presented by:
Manushi Paul (140)
Aditi Pilania (141)
Nitika Sharma (148)
Apurva Srivastava (154)
Introduction
• The Index of Economic Freedom is a series
of 10 economic measurements created by the
Heritage Foundation and Wall Street Journal
in 1995.
• Its stated objective is to measure the degree of
economic freedom in the world's nations.
What is Economic Freedom?
• In an economically free society, individuals are
free to work, produce, consume, and invest in
any way they please, with that freedom both
protected by the state and unconstrained by the
state.
• In economically free societies, governments
allow labour, capital and goods to move freely,
and refrain from coercion or constraint of
liberty beyond the extent necessary to protect
and maintain liberty itself.
Index of Economic Freedom - 2009

Source: http://en.wikipedia.org/wiki/Index_of_Economic_Freedom
How is Economic Freedom measured?
• Ten components of economic freedom are taken
into consideration, assigning a grade in each
using a scale from 0 to 100, where 100
represents the maximum freedom.
• The ten component scores are then averaged to
give an overall economic freedom score for
each country.
Components of Economic Freedom
• The ten components of economic freedom are:
a.Business Freedom
b.Trade Freedom
c.Fiscal Freedom
d.Government Size
e.Monetary Freedom
f. Investment Freedom
g.Financial Freedom
h.Property rights
i. Freedom from Corruption
j. Labour Freedom
The Top 10 countries
Rank Country Overall Change
1 Hong Kong 90 (‘09
0.3 vs. ‘08)
2 Singapore 87.1 -0.2
3 Australia 82.6 0.4
4 Ireland 82.2 -0.3
5 New Zealand 82 1.2
6 United States 80.7 -0.3
7 Canada 80.5 0.3
8 Denmark 80 0.4
9 Switzerland 79.4 -0.1
10 United Kingdom 79 -0.5
Distribution of Economic Freedom

•India is ranked a low 123rd among 179 countries

surveyed in 2009 with a freedom score of 54.4.
•Countries like North Korea, Zimbabwe, Cuba and
Burma are the lowest with a freedom score of as
low as 2.0 (North Korea).

(Source: http://www.heritage.org/Index/Ranking.aspx)
Economic Freedom Index - India
• India’s economic freedom score is 54.4, making
its economy the 123rd freest in the 2009 Index.
• Its score is only 0.3 point higher than last year
because improvements in financial freedom,
government size, and business freedom were
offset by significant decreases in investment
freedom and labour freedom.
• India is ranked 25th out of 41 countries in the
Asia–Pacific region, and its overall score is
below the world average.
Top 25 countries vs. India
India vis-a-vis the world average
Trend Analysis – 1995-2009 (India)
Thank You