South Africa’s economic freedom ranking has dropped phenomenally in 18 years – from being in the world’s top 30% in 2000 to the bottom 40% in 2018.
According to the Economic Freedom of the World index, South Africa ranks 94 out of 162 countries and territories according to their economic system.
The index measures the degree to which the policies and institutions of countries support economic freedom. In 2000, South Africa ranked 46th in the world, which meant being in the top 30% of economically free countries. Not only was it high on the index, but it was rising, destined to be one of the world’s freest and thus most prosperous countries.
Unfortunately, instead of building on its post-apartheid achievement, South Africa started sliding down the rankings and is now in the bottom 40%. This means that South Africans now have less economic freedom than they had gained by 2000. Sliding down the index condemns countries to lower incomes, greater poverty, more inequality, reduced life expectancy, fewer political rights and liberties and bleak prospects for the quality of life.
“If South Africa is to increase prosperity and reduce unemployment and poverty, it is essential that the financial sector be allowed to function as freely and efficiently as possible without stifling bureaucracy, and that true judicial independence be restored expeditiously,” said Free Market Foundation (FMF) executive director, Leon Louw.
Hong Kong and Singapore top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, Ireland, the United States, Georgia, Mauritius, the United Kingdom, and Australia with Canada (tying for 10th) complete the top 10.
The index is based on data from 2016 (the most recent year of available data) and measures the economic freedom of 162 countries and territories for which data are available.
The 10 lowest-ranked countries are Sudan, Guinea-Bissau, Angola, Central African Republic, Republic of Congo, Syria, Algeria, Argentina, Libya, and, last-place, Venezuela. Some despotic backward countries such as North Korea and Cuba cannot be ranked due to lack of data.
Other notable countries include Germany (20th), Japan (41st), France (57th), Russia (87th) and China (108th).
According to peer-reviewed research, people in countries with more economic freedom are more prosperous, enjoy more political and civil liberty, and live longer.
Countries in the top quartile (25%), such as the UK, Japan and Ireland, had per-capita incomes of more than $40 000 in 2016 compared with less than $6000 for the bottom quartile, such as Venezuela, Iran and Zimbabwe.
Life expectancy is nearly 80 years in the top quartile compared with just 65 years in the bottom quartile.
“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” said Fred McMahon of the Fraser Institute.
South Africa’s largest score reductions in economic freedom (where 1 is low and 10 high) are Judicial Independence down from 8.03 to 6.52, Independent Courts from 7.42 to 5,45, and Regulation of Credit from 10.00 to 7.50.
See the full report at www.fraserinstitute.org/economic-freedom
Economic Freedom of the World: 2018 Annual Report ranks 162 countries and territories. The index appears annually and is produced by Canada’s Fraser Institute in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories including South Africa’s Free Market Foundation.
The index is the world’s premier measurement of economic systems. It measures and ranks countries in five areas: (1) size of government, (2) legal structure and security of property rights, (3) access to sound money, (4) freedom to trade internationally, and (5) regulation of credit, labour and business.