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Economic Freedom and Hong Kong: A Status Report

Explore the Economic Freedom of the World Index, its components, and the impact of economic freedom on society. Learn about the 130 countries ranked based on key factors like government size, property rights, and trade regulations. Discover how institutes worldwide collaborate to promote economic freedom.

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Economic Freedom and Hong Kong: A Status Report

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  1. Economic Freedom and Hong Kong:A Status Report November 30, 2006 Mark Mullins, Executive Director The Fraser Institute

  2. Economic Freedom of the World Project • Objective: find a way to measure economic freedom and explore the connection between it and other variables • 20 year project • Led by Professor Milton Friedman, Rose Friedman and Michael Walker • Involved 60 of the world’s top scholars

  3. What is The Economic Freedom of the World Index? • An annual compilation of data representing factors which make a country economically free • Authors: James Gwartney and Robert Lawson • A compendium of 38 government policies affecting economic freedom based on objective data or independent surveys • A ranking of 130 countries representing 93% of the world’s population according to the extent to which they permit their citizens to be economically free • Now a collaboration of Institutes in 72 different countries

  4. Economic Freedom Defined Individuals have economic freedom when property they acquire without the use of force, fraud, or theft is protected from physical invasions by others and they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. An index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions. James Gwartney et al. 1996

  5. Components of The Economic Freedom of the World Index • Size of government and taxation • Private property and the rule of law • Soundness of money • Trade regulation and tariffs • Regulation of business, labour and capital markets Based entirely on objective or third party data for 130 countries

  6. Talk about making a difference …

  7. Member Institutes of Economic Freedom of the World Network Albanian Center for Economic Research, Albania Fundación Libertad, Argentina Institute of Public Affairs, Australia TIGRA®, Austria Center for Economic and Political Research, Azerbaijan The Nassau Institute, Bahamas Making Our Economy Right (MOER), Bangladesh Scientific Research Mises Center, Belarus Centre for the New Europe, Belgium Fundacion Libertad y Democracia (FULIDE), Bolivia Instituto Liberal do Rio de Janeiro, Brazil Institute for Market Economics, Bulgaria Cambodia Institute of Development Study, Cambodia The Fraser Institute, Canada Instituto Libertad y Desarrollo, Chile ILP- Instituto Libertad y Progreso, Colombia Instituto para la Libertad y el Análisis de Políticas, Costa Rica The Institute of Economics, Croatia Liberální Institut, Czech Republic Center for Politiske Studier (CEPOS), Denmark Fundación Economía y Desarrollo Inc., Dominican Republic Instituto Ecuatoriano de Economía Política, Ecuador International University Concordia Audentes, Audentes University, Estonia Association pour la Liberté Economique et le Progrès Social (ALEPS), France Society for Disseminating Economic Knowledge:“New Economic School – Georgia”, Georgia Liberales Institut, Germany The Institute of Economic Affairs, Ghana Centro de Investigaciones Económicas Nacionales, Guatemala Institut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), Haiti Hong Kong Centre for Economic Research, Hong Kong Szazadveg Foundation, Hungary Centre for Social and Economic Research, Iceland Centre for Civil Society, India The Institute for Development of Economics and Finance, Indonesia Open Republic Institute, Ireland Institute for Advanced Strategic and Political Studies, Israel Centro Einaudi, Italy Bureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory Coast African Research Center for Public Policy and Market Process, Kenya Center for Free Enterprise, Korea Economic Policy Institute-Bishkek Consensus, Kyrgyz Republic Lithuanian Free Market Institute, Lithuania D'Letzeburger Land, Luxembourg Centro de Investigación para el Desarrollo A.C., Mexico Open Society Forum, Mongolia The Center for Entrepreneurship and Economic Development, Montenegro The New Zealand Business Roundtable, New Zealand Institute of Public Policy Analysis, Nigeria Civita – Center for Business and Society Incorporated, Norway Alternate Solutions Institute, Pakistan Fundación Libertad, Panama Centro de Investigación y Estudios Legales (CITEL), Peru The Center for Research and Communication, Philippines Centrum im. Adama Smitha, Poland Causa Liberal, Portugal Romania Think Tank, Romania Institute of Economic Analysis, Russia The F.A. Hayek Foundation, Slovak Republic The Free Market Foundation of Southern Africa, South Africa Pathfinder Foundation , Sri Lanka International Research Foundation (IRF), Sultanate of Oman Timbro, Sweden Liberales Institut, Switzerland Arthur Lok Jack Graduate School of Business, The University of the West Indies, Trinidad, W.I. Association for Liberal Thinking, Turkey The Ukrainian Center for Independent Political Research, Ukraine The Institute of Economic Affairs, United Kingdom CATO Institute, USA The Centre for the Dissemination of Economic Knowledge (CEDICE), Venezuela Research Center for Entrepreneurship and Development Policies, Vietnam Free Market Center (FMC), Yugoslavia Zambia Institute for Public Policy Analysis (ZIPPA), Zambia

  8. Sample of Press Coverage for Fraser Institute’ Economic Freedom of the World 2005 All Africa, Africa Asia Pulse, Australia Australian Financial Review, Australia Scoop, Australia Latin America News Digest, Brazil Capital Weekly, Bulgaria El Diario de Hoy, Central America Diario Financiero, Chile El Financiero, Chile Xinhua News Agency, China South China Morning Post, China China Daily-Hong Kong Edition, China Ambiito Juridico, Colombia Portafolio, Colombia La Prensa Libre, Costa Rica El Financiero, Costa Rica Hina, Croatia Hospodarske Noviny, Czech Republic Borsen, Denmark Jyllands-Posten, Denmark Baltic Business Weekly, Estonia BBC Monitoring, Europe Radio Liberty, Georgia Frankfurter Allgemeine, Germany Vereinigte, Germany Financial Express, India Hindustan Times, India Journal of Commerce, International El Cronista Comercial, International El Nacional, International International Herald Tribune, International Israel Business Arena, Israel Jerusalem Post, Israel ItaliaOggi, Italy Il Sole, Italy Il Giornale, Italy Korea Times, Korea Seoul Daily, Korea Korea Herald, Korea Noticias Latinoamericanas, Mexico Agencia Mexicanan De Noticias, Mexico Republika, Montenegro Financial Times Deutschland, Netherlands Dominion Post, New Zealand Times of Oman, Oman Daily times, Pakistan Rzeczpospolita, Poland La Tribune, Canada Montreal Gazette, Canada Rumanian, Romania St. Petersburg Times, Russia Moscow Times, Russia Interfax, Russia Russian Publication, Russia Plenipotentiary, Russia Republika, Serbia/Montenegro Vijesti, Serbia/Montenegro Pobjeda, Serbia/Montenegro Straits Times, Singapore Ekonomicka Sloboda, Slovakia Hodin Daily, Slovakia Pravda Daily, Slovakia Business Day, South Africa El Economista, Spain Libertad Digital, Spain L'Agefl Suisse, Switzerland Bangkok Post, Thailand Trinidad Guardian, Trinidad & Tobago Financial Times, UK Investor's Business Daily, US Financial Times, US El Nacional, Venezuela

  9. Economic Freedom Projects

  10. Marketization Index of Chinese Provinces

  11. Economic Freedom Index of Indian States

  12. Economic Freedom of North America

  13. Economic Freedom Index of Argentine Provinces

  14. Economic Freedom of the Arab World

  15. Arab Economic Freedom Project • International Research Foundation founded in Oman • Third Annual Economic Freedom of the Arab World Report • Regional economic freedom conferences in the Middle East – Muscat and Beirut • Economic Freedom of the Arab World Awards • Omani and Lebanese Audits • Documentaries on entrepreneurship and policy

  16. Hong Kong’s Relative Success

  17. Hong Kong’s Relative Success • Number one ranked since 1970 • Highest ever economic freedom in the world at 9.1 out of 10 in 1995 • But … • Peaked in 1995 • Tenth worst decline in world in past decade • Slipping relative to top 10, top 20, and the world • Accelerating decline over time • Broad decline in many measures

  18. Overall Economic Freedom Index and the Top 10 Source: The Fraser Institute.

  19. Overall Economic Freedom Source: The Fraser Institute.

  20. Hong Kong’s Relative Success • Still number one in the 2006 report • High economic freedom rating at just under 8.7 • But the trend is not Hong Kong’s friend • And what about China where economic freedom is rising? • Here are the warning signs for the five components of economic freedom in Hong Kong ….

  21. Warning Sign:Wrong-Sizing Government

  22. Size of Government and the Top 10 Source: The Fraser Institute.

  23. Size of Government Source: The Fraser Institute.

  24. General government consumption spending Source: The Fraser Institute.

  25. Transfers and subsidies Source: The Fraser Institute.

  26. Wrong-Sizing Government Policies • New GST will raise the tax burden and increase government consumption and transfers • The tax is not “tax neutral” • Industrial subsidies distort investment and increase political intervention in economy • Spending down recently but the government is caught in vocal demands for more interventions

  27. Warning Sign:Politics and the Law

  28. Legal System and Property Rights and the Top 10 Source: The Fraser Institute.

  29. Legal System and Property Rights Source: The Fraser Institute.

  30. Judicial independence Source: The Fraser Institute.

  31. Impartial courts Source: The Fraser Institute.

  32. Integrity of the legal system Source: The Fraser Institute.

  33. Politics and the Law Policies • The weakest component and slipping further • Perceptual issues regarding politicization of judicial and legal systems • Integration with China may be part of the problem – producer and intellectual property rights are slipping there • Democratization begets politicization

  34. Green Light:Money Remains Sound

  35. Sound Money and the Top 10 Source: The Fraser Institute.

  36. Sound Money Source: The Fraser Institute.

  37. Sound Money Policies • Peg is secure • System was tested through Asian crisis and deflation • Monetary Authority retains its independence • Steady progress to renminbi-based trade and finance

  38. Warning Sign:Trade Regulations and Capital

  39. Freedom to Trade Internationally and the Top 10 Source: The Fraser Institute.

  40. Freedom to Trade Internationally Source: The Fraser Institute.

  41. Regulatory trade barriers Source: The Fraser Institute.

  42. International capital market controls Source: The Fraser Institute.

  43. Access of citizens to foreign capital markets/foreign access to domestic capital markets Source: The Fraser Institute.

  44. Restrictions on citizens to engage in capital market exchange with foreigners Source: The Fraser Institute.

  45. Trade and Capital Policies • Watch non-tariff regulatory trade barriers • Is a non-preferential capital investment policy being eroded through industrial subsidies? • Capital restrictions must be addressed

  46. Warning Sign:Tied Up in Red Tape

  47. Regulations and the Top 10 Source: The Fraser Institute.

  48. Regulations Source: The Fraser Institute.

  49. Credit Market Regulations and the Top 10 Source: The Fraser Institute.

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