South Africa is ranked 99th out of 165 countries and territories included in the 2022 Annual World Economic Freedom Report, recently released by the Free Market Foundation in association with Canada’s Fraser Institute.

Last year, South Africa was ranked 93rd and has therefore slipped further down the rankings. The best place in the country’s ranking — 47th — was reached in 2000.

Low rating due to reduced economic activity

According to FMF director Eustace Davey, the reason for the deterioration of the rating of economic freedom is clearly visible in the deterioration of economic activity in the country. “A particularly significant and tragic consequence of this deterioration is mass unemployment,” he said.

When jurisdictions increase taxes and regulations, people become less economically free, which means slower economic growth and less investment.

Hong Kong and Singapore once again top the index, continuing to occupy first and second place respectively, while Switzerland, New Zealand, Denmark, Australia, the United States, Estonia, Mauritius and Ireland round out the top 10.

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“The most recent comprehensive data is from 2020,” said Fred McMahon, Ph.D. Michael A. Walker, Research Chair of Economic Freedom at the Fraser Institute. “Hong Kong is already showing a decline in freedom in 2020, and we expect the decline to continue.”

10 lowest ranked countries

The Democratic Republic of the Congo, Algeria, the Republic of the Congo, Iran, Libya, Argentina, the Syrian Arab Republic, Zimbabwe, Sudan and Venezuela received the lowest ratings. (Despotic countries such as North Korea and Cuba cannot be ranked due to lack of data.)

In the ranking of other major countries, Japan (12), Canada (14), Germany (24), Italy (43), France (54), Mexico (65), India (90), Russia (94), Brazil (114). ) and China (116th).

According to research in leading peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, greater political and civil liberties, and longer lives.

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For example, countries in the top quartile of economic freedom had an average GDP per capita of $48,251 in 2020, compared to $6,542 in countries in the bottom quartile.

And the poverty rate is lower. In the top quartile, 2.02% of the population experienced extreme poverty ($1.90 per day), compared to 31.45% in the bottom quartile.

Life expectancy between upper and lower quartile

Finally, life expectancy is 80.4 years for the top quartile of countries compared to 66.0 years for the bottom quartile.

“Where people are free to use their own opportunities and make their own choices, they lead richer, happier and healthier lives,” McMahon said.

SA Scorecard

South Africa’s scores on the key components of economic freedom (from 1 to 10, where a higher value indicates a higher level of economic freedom):

  • Size of government: Down to 5.99 from 6.14 in last year’s report
  • Legal System and Property Rights: Improved to 5.95 from 5.09
  • Access to Safe Money: Reduced to 8.21 from 8.24
  • Freedom of International Trade: Decreased to 5.8 from 6.6
  • Credit, Labor and Entrepreneurship Regulation: Decreased to 6.78 from 7.16

“All South Africans who have any influence over the country’s economy should take note of the detailed economic analysis this study provides,” Davey said.

“This includes members of Parliament, the Reserve Bank, business leaders, government officials, members of all political parties and economic commentators. The message is clear. The greater the level of economic freedom in the country, the better the country’s citizens will live.

“There is no reason why South Africans should not be as economically free or even more free than people living in Estonia, Mauritius or Ireland. The people of South Africa must demand that their country becomes one of the freest in the world, as the Mauritians set out to do and have achieved in 20 years.”

The report, published in 1996, measures economic freedom — people’s ability to make their own economic decisions — by analyzing several indicators, including regulation, government size, property rights, government spending, and taxation.

*Information and recording provided by Free Market Foundation

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