By Josh Friedman
The United States fell to 17th place in the Economic Freedom Index, an annual ranking of countries by economic liberty. Nations like the United Arab Emirates, Georgia and Lithuania now offer more economic freedom than the U.S., according to The Heritage Foundation, a conservative Washington, D.C.-based think tank.
In the 2017 Economic Freedom Index, which was released this week, the Heritage foundation gave the U.S. a score of 75.1. That score was America’s lowest in the 23-year history of the index.
The Heritage Foundation scores countries on a 0-100 scale, with 100 being the most economically free. There are 180 countries and territories included in the latest rankings.
Last year, the U.S. received a score of 75.4 and ranked 11th worldwide in economic freedom. When former President Barack Obama took office in 2009, the U.S. scored 80.7 and ranked 6th in the index. Researchers who produce the index say the decline in economic freedom reflects poorly upon the Obama Administration.
“This 2017 index of economic freedom is basically the score card for the previous administration,” said Anthony Kim, the research manager of the index.
Kim attributes the U.S.’s decline in the index over the last eight years primarily to heavy government spending and overregulation.
The Heritage Foundation defines economic freedom as “the fundamental right of every human to control his or her own labor and property.” That includes the freedom to work, produce, consume and invest.
Governments can maintain economic freedom by allowing labor, capital and goods to move freely, according to The Heritage Foundation. The think tank says increases in economic freedom result in more opportunity and productivity, as well as higher wages.
In 2017, 103 countries improved their economic freedom score, while 73 nations saw their scores decline. In the current index, five countries are classified as “free,” 87 are considered “mostly free” or “moderately free,” 65 are “mostly unfree” and 23 are “repressed.”
The top five countries — the “economically free” group — remained unchanged from the 2016 index. Those states are: Hong Kong, Singapore, New Zealand, Switzerland and Australia.
Estonia, Canada, the United Arab Emirates, Ireland and Chile round out the top 10 in the rankings.
Eritrea (176), Republic of Congo (177), Cuba (178), Venezuela (179) and North Korea (180) occupy the bottom 5.
War-torn Iraq, Libya, Somalia, Syria and Yemen are unranked. European microstate Lichtenstein, which offers a considerable amount of economic freedom, is also absent from the rankings.
By region, Europe ranked first with an average score of 68.0. The Middle East and North Africa (61.9), Asia-Pacific (60.3), the Americas (60.0) each had average scores of at least 60. Sub-Saharan Africa (55.0) scored the worst among regions.
The Heritage Foundation compiles the rankings based on four pillars, each of which have three subcategories. The factors in the rankings are: rule of law — property rights, government integrity and judicial effectiveness; government size — government spending, tax burden and fiscal health; regulatory efficiency — business freedom, labor freedom and monetary freedom; and open markets — trade freedom, investment freedom and financial freedom.
A high or low overall score does not necessarily indicate a country is a good or bad place for an individual to open a business, invest or work. For instance, when evaluating business opportunities, some entrepreneurs prioritize low taxes and limited regulations, while others might insist on a location with rule of law.