VILNIUS – The level of economic freedom in Lithuania has increased very slightly from 1997 until 2000 and Lithuania remained the lowest ranking country among the Baltic States, according to the Economic Freedom of the World: 2002 Annual Report.
The report, published by the Lithuanian Free Market Institute and Canada’s Fraser Institute, in conjunction with independent institutes from 54 other countries, ranks 123 countries on their level of economic freedom. This comprehensive index, constructed under the leadership of The Fraser Institute and Nobel Laureate in Economics, Milton Friedman, is the most objective and accurate measure of economic freedom published to date by any organization.
Lithuania has shown the poorest performance among the Baltic States
According to the world economic freedom index, Lithuania has moved from 62nd to 60th place from 1997 until 2000. Latvia has shifted up from 60th to 47th place. Estonia has shown the best performance of the three Baltic States, moving from 57th to 35th place. In two years’ time Estonia has improved its ranking by 22 positions, Latvia, by 13 positions, and Lithuania, by 2 positions. Lithuania is tied on the list with such countries as Haiti, Malta, Nicaragua, Uganda, and Zambia.
According to the report, Hong Kong retains the highest rating for economic freedom and ranks 1st, closely followed by Singapore, the United States, the United Kingdom, and New Zealand. The other top 5 nations were Switzerland, Ireland, Australia, Canada, and the Netherlands. The rankings of other large economies are Japan, 24; Germany, 15; China, 101; and Russia, 116. Most of the lowest ranking nations are in Africa, Latin America and former communist states.
According to the report, economic freedom continues to gain ground globally. Economic freedom decreased through the 1970s, but it has been on the rise since 1980.
Economic Freedom Causes Growth
Nations that score in the top fifth of the economic freedom rankings have an average per capita income of US$23,450 and average economic growth of 2.6 per cent a year; compared to an average per capita income of $2,560 and negative economic growth of 0.9 per cent in nations that score in the bottom quintile.
Empirical studies have examined the question of whether wealth causes economic freedom or whether economic freedom causes wealth and economic growth. These studies show that causation flows from economic freedom to superior economic outcomes. Africa’s persistent poverty is not due to a lack of foreign aid – African nations are the largest aid recipients – but to a lack of economic freedom on the continent.
Economic freedom is also positively correlated with low poverty rates, superior health outcomes, literacy, good nutrition, low levels of child labor, civil and political freedoms, superior rankings on the United Nations Human Development Index, and low levels of corruption along with other positive results.
About the Economic Freedom Index
This 6th edition of Economic Freedom of the World presents updated figures and backdates the data to 1970 (where possible). The addition of historical data makes this the most comprehensive measure of economic freedom ever published. This wealth of data will provide researchers with an opportunity to further explore the relationships between economic freedom and other important social indicators. The first report was published in 1996 after a decade long research project, involving over 100 top scholars including several Nobel Laureates.
The five major categories of variables included in the index are: (1) size of government: expenditures, taxes, and enterprises, (2) legal structure and security of property rights, (3) sound money, (4) freedom of trade with foreigners, and (5) regulation of credit, labour, and business.
Economic Freedom of the World: 2002 Annual Report can be viewed on the web site at
www.freetheworld.com.
