Hong Kong, Singapore freest economies in world


Hong Kong kept its place at the top, edging Singapore with its lower tax rate and lack of government involvement

By Alex Frew McMillan
CNN Hong Kong

HONG KONG, China (CNN) -- Hong Kong is the freest economy in the world, as ranked by the Heritage Foundation, followed by Singapore and New Zealand.

But the Asia Pacific has economic black holes as well as rays of light. North Korea's closed economy is the most repressive on the planet, tied with Iraq, the foundation reports.

The conservative think tank on Monday put out the eighth installment of its Index of Economic Freedom. It ranks 156 countries around the world to see how free their economies are.

The tally includes 50 variables, looking at trade, the tax burden, property rights, wages, prices, the banking system and the like.

Hong Kong and Singapore both score high thanks to their duty-free ports, good property-rights protection, minimal barriers to overseas investment and extremely low inflation.

Hong Kong, which also topped the list last year, got a boost from its low rate of income tax. It gets the edge over its South East Asian rival because of Singapore's greater tax burden and higher level of government interference.

According to the Heritage Foundation, citizens should be able to feel the effects of economic freedom in their pocketbooks. The freer the economy, the higher per-capita income tends to be.

The foundation reports that economic freedom is generally on the rise. In all, 73 of the 161 countries had better scores than last year.

But conditions got worse in 53 countries, with 27 remaining unchanged. The Central African Republic, Macedonia and Yugoslavia were newcomers to the list.

Asia improving

Property rights continue to decline, in particular, especially in Latin America and the Caribbean.


Four of the freest economies are in the Asia Pacific, with Australia, New Zealand and Singapore just behind Hong kong

The most economically repressed regions of the world are sub-Saharan Africa and the Asia-Pacific region. Indeed, southern Africa had five countries that are so anarchic, they effectively cannot be ranked at all, the group stated.

Worst among Asia's bottom feeders is North Korea. But the socialist regime in Laos scored almost as badly, and the military regime in Burma comes close. The central Asian countries of Turkmenistan and Uzbekistan also rank among the most repressed places to do business.

But the Asia Pacific region also scored four countries at the top of the list. Besides the top three, Australia tied for ninth place.

By and large, the economic picture is improving in Asia, the Heritage Foundation states. The region has largely recovered from the Asian financial crisis, and 17 countries improved over last year, while just seven got worse.

The black market poses the biggest threat in Asia, the group states.

U.S., U.K. drift a little over last year

Overall, the continents of North America and Europe score the best. But some of the bigger economies there slipped slightly, with the rankings of the United States and the United Kingdom drifting a little over last year, as black-market factors blackened their overall good score.

The freest economies in the world, with their total scores, are: 1. Hong Kong (1.35); 2. Singapore (1.55); 3. New Zealand (1.70); 4. Estonia, Ireland, Luxembourg, the Netherlands, the United States (five tied at 1.80); 9. Australia, Chile, the United Kingdom (three tied at 1.85).

At the other end of the scale, these are the most repressed economies in the world, that could be ranked: 155. Iraq, North Korea (two tied at 5.00); 153. Cuba, Libya (two tied at 4.75); 151. Iran, Laos (two tied at 4.55); 150. Turkmenistan (4.40); 148. Belarus, Uzbekistan (two tied at 4.35); 147. Zimbabwe (4.30); 145. Burma, Syria (two tied at 4.10).

Asian economies generally either scored as very free or as very repressed. But there was a grouping of countries that scored well in some aspects, with Taiwan, Thailand, Japan and South Korea all rank in the high 20s or 30s on the list.