| Index Of Economic Freedom |
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The Indexes of Economic Freedom are several similar indexes released annually. One is published by The '' Wall Street Journal '' and the conservative think-tank Heritage Foundation . A different index is published by the Fraser Institute . METHODOLOGY The Heritage index measures how countries score on a list of 50 independent variables. They include:
These are divided into 10 broad factors of economic freedom:
The higher a country's score on a factor the less economic freedom there is. The 10 factors are given equal weight in determining the final score. Depending on their score, countries are then separated into four categories: Free, Mostly Free, Mostly Unfree, and Repressed. CURRENT RATINGS The most current ratings are for 2006 . Note: countries sharing the same rank received a tie score. For example, Iceland and the United Kingdom are tied for the rank of 5th most economically free country. Also note that a detailed description of the conditions in each country can be found on: http://www.heritage.org/research/features/index/countries.cfm. ''Note: Due to economic or political instability, the Democratic Republic Of The Congo , Iraq , Papua New Guinea , Samoa , Serbia And Montenegro , Somalia and Sudan were not ranked. There is also no data for countries with very small populations including Andorra , Antigua And Barbuda , Bhutan , Dominica , East Timor , Grenada , Liechtenstein , Micronesia , Monaco , San Marino , Saint Lucia , São Tomé And Príncipe , Saint Vincent And The Grenadines , Saint Kitts And Nevis , Vatican City , Tonga , Tuvalu , and Seychelles .'' Developments
SIMILAR INDICES
RESEARCH Many peer-reviewed articles have used these indices. [http://www.freetheworld.com/papers.html One question has been what subcomponents are responsible for economic growth. Strong property rights and low inflation may be particularly important. Regarding the size of government and free trade there is much conflicting evidence. More economic freedom correlates strongly with higher average income per person, higher income of the poorest 10%, higher life-expectancy, higher literacy, lower infant mortality, higher access to water sources and less corruption. The share of income in percent going to the poorest 10% is the same for both more and less economically free countries. {Link without Title} . An overview of research can be found here {Link without Title} , including studies showing that more economic freedom is the cause of beneficial effects. CRITICISM Some economists and commentators have criticized the ''Index'' on several grounds—asking, for instance, if Canada's slightly higher income tax rates make it a less economically free country than the United States. Critics of the index's methodology most commonly take issue with its equation of Regressive Taxation , low tax rates generally, and weak worker protection regulations with economic freedom. Some critics go further, saying that the index judges countries against a specious list of 'ideal' economic and fiscal policies, which reflect the Heritage Foundation and ''Wall Street Journal'' 's own Laissez-faire economic and fiscal policy ideas more than they do a substantive concept of economic freedom. For such critics, the list is simply a promotional tool for laissez-faire policy, rather than a meaningful index of economically free countries. In response, proponents point out that the indexes and their subcomponents have been used in much research, independent of the creators of the indices, published in numerous Peer-reviewed papers. Such peer-review includes the methodology used in creating the indices. That the creators of the indexes support laissez-faire capitalism does not invalidate the empirical research. Also, this independent research does not necessarily support the ideals of laissez-faire. For example, when examining the effects of subcomponents of the index, any positive effect that a low level of taxes might have is much more disputed than the importance of rule of law, lack of corruption and functioning property rights. Some of the highest ranking countries in the index, for example Iceland (# 5), Denmark (# 8), Finland (# 12) and Sweden (# 19) are widely recognized as having some of the world's most extensive Welfare State s, which are strongly opposed by advocates of laissez-faire. The World Bank is a strong supporter of the importance of Economic Growth for reducing Poverty . However, the World Bank does not believe that laissez-faire policies, if they allow large inequalities of wealth to develop, are an effective way to achieve this goal. It argues that an overview of many studies shows that:
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