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Hong Kong Ranked As Freest Economy For 22nd Year

Friday, February 17, 2017

For the 22nd consecutive year, Hong Kong has maintained its position as the world's freest economy in the 2017 Index of Economic Freedom from the Heritage Foundation (HF).

HF highlighted Hong Kong's high degree of economic resilience, high-quality legal framework, a high degree of government transparency, regulatory efficiency, and its openness to global trade and investment.

Hong Kong's "regulatory efficiency and openness to global commerce strongly support entrepreneurial activity," it said. As "one of the world's most competitive financial and business hubs, Hong Kong is by far the most significant transit point for exports and imports to and from China."

It also pointed to Hong Kong's low, simple, and efficient tax regime. The overall tax burden equals 14.4 percent of total domestic income, and government spending has amounted to only 18.3 percent of total gross domestic product (GDP) over the past three years. Budget surpluses have averaged two percent, and public debt is equivalent to 0.1 percent of GDP.

Finally, HF welcomed the importance of trade to Hong Kong's economy, with the value of exports and imports totaling 400 percent of GDP. The average applied tariff rate is zero percent.

The 2017 Index of Economic Freedom ranks the degree of economic freedom in 178 economies around the world. Twelve factors are assessed: tax burden, government spending, fiscal health, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, financial freedom, property rights, judicial effectiveness, and government integrity.

Hong Kong achieved an overall score of 89.8 (on a scale from 0 to 100), an increase of 1.2 points compared with last year. This score was significantly above the global average of 60.9. Singapore was ranked second with 88.6, followed by New Zealand (83.7), Switzerland (81.5), and Australia (81).

"Of the 180 economies whose economic freedom has been graded and ranked in the 2017 Index," HF pointed out that only [these] five have sustained very high freedom scores of 80 or more, putting them in the ranks of the economically 'free.'"

A further 29 countries, including Chile, the United Arab Emirates, the United Kingdom, the United States, and Mauritius, have been rated as "mostly free" economies with scores between 70 and 80.

The United States scored 75.1 (an annual fall of 0.3), making its economy only the 17th freest in the 2015 Index, below the United Kingdom (76.4) in 12th place, and Canada (78.5) in 7th place. HF noted that the United States has "registered its lowest economic freedom score ever. Large budget deficits and a high level of public debt, both now reflected in the Index methodology, have contributed to the continuing decline in America's economic freedom."