Economic Freedom Indices

Two major indices track economic freedom: Heritage Foundation Index of Economic Freedom and Fraser Institute Economic Freedom of the World. Both rank countries on property rights, government size, regulatory burden, sound money, free trade, free markets. Singapore, Hong Kong, Switzerland, New Zealand consistently lead. Authoritarian and centrally-planned economies score lowest.

83.5

Singapore Heritage score (highest in 2024)

28.7

North Korea Heritage score (lowest)

70+

Score considered 'mostly free'

Pillars in Fraser EFW index

Key insights

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Singapore and Hong Kong consistently top rankings

Singapore #1 on both Heritage Index (83.5) and Fraser EFW (8.56). Hong Kong was historically #1 on Heritage but was removed from rankings in 2021 after Beijing's increased control. New Zealand, Switzerland, Ireland, Denmark, USA round out top tiers. The indices identify common features: rule of law, secure property rights, free trade, sound money, modest regulation. Less common features: small government size matters more for Heritage than Fraser.

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Trends are mixed

Global average economic freedom rose ~1990-2007, has trended flat-to-slightly-down since 2008 financial crisis. COVID-era expansions of state intervention reduced freedom scores in many countries. Trade restrictions (US-China escalations, EUDR, IRA) reduce freedom scores. The 'long arc' since 1990 is still positive but shorter-term direction has reversed.

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Freedom-growth relationship is contested

Cross-country regressions show positive correlation between economic freedom and per-capita income. But: rich countries can afford freedom; freedom doesn't cause wealth necessarily. China grew fastest while economic freedom was low. Singapore is highly free but heavily managed. Causality runs unclear — most economists accept freedom matters but the simple 'free = grow' narrative oversimplifies the evidence.

Key Finding: Singapore tops at 83.5; North Korea bottom at 28.7. OECD economies cluster 70-78.

Key Finding: Rose substantially 1980-2007; flat-to-slightly-down since 2008.

Methodology & caveats

Heritage methodology

12 components in 4 categories: rule of law (property rights, government integrity, judicial effectiveness), government size (taxation, government spending, fiscal health), regulatory efficiency (business, labor, monetary freedom), open markets (trade, investment, financial freedom). Composite score 0-100. Annual update since 1995.

Fraser methodology

5 categories: size of government, legal system & property rights, sound money, freedom to trade internationally, regulation. 45 sub-indicators. Combined index out of 10. Published since 1996 with consistent methodology allowing time-series comparison.

Criticism of indices

Critics: indices reflect specific ideological priors (libertarian/free-market), weighting choices are subjective, government size penalty conflates 'big' with 'inefficient'. Defenders: components are empirically measurable, methodology is transparent, rankings correlate with widely-accepted economic outcomes. The indices are most useful as one data source among several, not authoritative scores.