Economic Freedom Flourishes in an Unlikely Place…Africa

By the Heritage Foundation, Special for US Daily Review.

Led by an historic breakthrough for Mauritius, the countries of Sub-Saharan Africa did more to expand economic freedom in 2011 than did the countries of any other region, according to the 2012 Index of Economic Freedom, published annually byThe Wall Street Journal and The Heritage Foundation.

Mauritius became the first of the 48 countries in the region to reach the top 10 in the annual rankings. Its score of 77.0 – on a 1-100 scale with 100 being best – marked an improvement of eight-tenths of a point over the previous year and is the highest ever achieved by a Sub-Saharan country. Second-place Botswana also added 0.8 for a score of 69.6. Rwanda took third place with an increase of 2.2 points – the third straight year it has improved by more than two points.

Launched in 1995, the Index evaluates countries in four broad areas of economic freedom: rule of law; regulatory efficiency; limited government; and open markets. Based on its aggregate score, each of 179 countries was classified as “free” (i.e. combined scores of 80 or higher); “mostly free” (70-79.9); “moderately free” (60-69.9); “mostly unfree” (50-59.9); or “repressed” (under 50).

In Sub-Saharan Africa, several measures reflect a dramatic move toward increased economic freedom. Six of the world’s 10 fastest-growing economies over the last decade are in the region and poverty there, in the words of two Columbia University researchers, is “falling – and much faster than you think.”

Growth in gross domestic product (GDP) since 1997 is a third higher in Mauritius than in the United Kingdom, where Index scores declined during the same period.

“Underpinned by a sound and transparent legal framework that strongly upholds the rule of law, a competitive tax regime and an efficient regulatory environment have encouraged broad-based and diversified economic development in Mauritius,” the Index editors wrote.

The world average score for economic freedom dipped to 59.5, a drop of two-tenths of a point, and the second-lowest score of the past 10 years. Scores improved for 75 of the 179 countries rated, declined for 90 and stayed the same for the rest.

Sub-Saharan Africa still has a long way to go. The region lags far behind the five other regions in overall economic freedom. It is dead last in seven of 10 measures of economic freedom. It sits 10 points behind average world scores in business freedom and about 12 points behind in property rights and freedom from corruption.

Of the region’s 46 countries, 13 are rated in the lowest category – “repressed” – and 23 are in the next lowest – “mostly unfree.” Nine of the world’s bottom 20 hail from this region.

But even at the bottom, there is room for optimism. Zimbabwe is ranked second-worst in the world in economic freedom, but it posted an increase of 4.2 points, making it the most improved.

Of the 179 countries ranked, only five were classified as “free.” Another 23 countries were rated “mostly free” and 89 were “mostly unfree” or “repressed.”

The 2012 Index was edited by Ambassador Terry Miller, director of Heritage’s Center for International Trade and Economics; Kim Holmes, Ph.D., Heritage’s vice president for foreign policy studies and director of the Davis Institute for International Studies; and Edwin J. Feulner, Ph.D., Heritage’s president. Copies of the Index (484 pages, $24.95) may be ordered online at www.heritage.org/index or by calling 1-800-975-8625. The full text, including charts and graphs, is available online

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