The Index of Economic Freedom ranks countries according to criteria that assess a country’s economic openness, trade and the efficiency of domestic regulators, freedom from corruption, property rights and the rule of law.
Zimbabwe was ranked 178 out of 179 countries assessed in the report compiled by the Washington-based Heritage Foundation and the Wall Street Journal. The report was released on Wednesday this week.
In 2008, Zimbabwe was in the same position.
The index measures economic freedom within 10 specific categories: labour freedom, business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights and freedom from corruption. Scores in these categories are averaged to create an overall score.
Political and economic analysts in Zimbabwe were quick to say that despite the progress by the inclusive government there were many contributory issues which weighed down on the country’s economic freedom rating.
Economist Eric Bloch said factors that affected the economic performance of the country include the failure by the government to protect property rights and the lack of rule of law.
“Government has been doing nothing to protect property rights; there is no rule of law in the country, farm invasions are still taking place, corruption is rampant and government is still regulating some sectors of the economy like labour and all these things add to lack of economic freedom,” Bloch said.
Bloch said the scarcity of foreign currency in the country also contributed to lack of economic freedom.
Political analyst Lovemore Madhuku however said Zimbabwe had bad policies but said it would be unfair to say the country was only ahead of North Korea on the list.
“Zimbabwe has very bad laws and it is a bad country and that is accepted by everyone, but to have the country last on a world survey will be unfair because there are other worse-off countries,” Madhuku said.
Madhuku said it was accepted that the country has no rule of law and has bad economic policies but said he needed to analyse the indicators used.
Unstable countries and those at war were not surveyed.
Hong Kong was ranked first in the world and the compilers of the report said it remained the world’s freest place to do business.
Singapore was ranked second while Australia and New Zealand were third and fourth. Ireland, Switzerland, Canada, the US, Denmark and Chile complete the list’s top 10.
“Zimbabwe’s score has decreased by 1,3 points from last year, reflecting notable declines in trade freedom, freedom from corruption and investment freedom. Zimbabwe is ranked 46th out of 46 countries in the sub-Saharan Africa region and is the world’s second least economically-free country,” reads part of the report.
“The Zimbabwean economy performs poorly and is characterised by instability and volatility, both hallmarks of excessive government involvement. Economic policy is overly influenced by political considerations and state interference. The country’s previously established economic infrastructure has crumbled under a tyrannical and oppressive regime. Zimbabwe’s economic climate has become increasingly hostile to foreign investment. The financial system, which suffers from repeated crises is failing.”
Making the bottom list with Zimbabwe on the Index of Economic Freedom are Cuba and North Korea ranked 177 and 179 respectively.
Of the 179 countries graded in this year’s Index, only seven scored 80 or higher, the rating necessary to qualify as having a “free” economy. Another 23 earned 70-79,9 points, ratings that characterise them as “mostly free”.
Fifty-eight economies are classified as “moderately free” (with scores between 60 and 69,9), while 55 are classified as “mostly unfree” (scores from 50 to 59,9). The remaining 36 economies are classified as “repressed” (scores below 50).
“The 2010 Index provides strong evidence that economic freedom has far-reaching positive impacts on various aspects of human development. Economic freedom correlates with poverty reduction, a variety of desirable social indicators, democratic governance, and environmental sustainability,” the report said.
Economies classified as free or mostly free also do a much better job promoting human development, reducing poverty and protecting the environment. The editors found strong correlations between levels of economic freedom and these economic and social variables.