South Africa ranks 99th for economic freedom, down from 47th in 2000
SA ranks 99th out of 165 countries and territories in the “Economic Freedom of the World” 2022 annual report, released on Thursday.
This is a deterioration from last year when SA ranked 93rd in the report by the Free Market Foundation (FMF) in conjunction with Canada’s Fraser Institute.
The country’s best ranking of 47th was achieved in 2000.
“When jurisdictions increase taxes and regulations, the people become less economically free, which means slower economic growth and less investment,” said Fred McMahon, a research chair with the Fraser Institute.
According to FMF director Eustace Davie, the reason for the decline is clearly visible in the deterioration in economic activity.
“Mass unemployment is a particularly significant and tragic consequence of that deterioration,” Davie said.
SA’s scores in key components (from 1 to 10 where a higher value indicates a higher level of economic freedom)
Size of government: declined to 5.99 from 6.14 in the last year’s report
Legal system and property rights: improved to 5.95 from 5.09
Access to sound money: declined to 8.21 from 8.24
Freedom to trade internationally: declined to 5.8 from 6.6
Regulation of credit, labour, and business: declined to 6.78 from 7.16.
“All South Africans who have any influence on the economy should take note of the detailed analysis of the economy this research provides.
“This includes MPs, the [SA] Reserve Bank, business leaders, government officials, members of political parties and commentators on economic matters.
“The message is clear: the greater the level of economic freedom, the better off citizens will be.
“There is no reason South Africans should not be as economically free or even more free than people living in Estonia, Mauritius or Ireland. The people of SA should demand that their country set out to become one of the freest in the world, just as Mauritians set out to do and achieved in 20 years.”
Hong Kong and Singapore top the index, continuing their streak as 1st and 2nd respectively, while Switzerland, New Zealand, Denmark, Australia, the US, Estonia, Mauritius and Ireland round out the top 10.
The 10 lowest-rated countries are the Democratic Republic of Congo, Algeria, Republic of Congo, Iran, Libya, Argentina, Syria, Zimbabwe, Sudan and Venezuela. Countries such as North Korea and Cuba can’t be ranked due to lack of data, the authors said.
The report, launched in 1996, measures economic freedom — the ability of individuals to make their own economic decisions — by analysing several indicators, including regulation, size of government, property rights, government spending and taxation. The year’s report, based on 2020 data (the most recent available), also captures the effect of Covid-related restrictions.
The rankings of other major countries include Japan (12th), Canada (14th), Germany (24th), Italy (43rd), France (54th), Mexico (65th), India (90th), Russia (94th), Brazil (114th) and China (116th).
Countries in the top quartile of economic freedom had an average per-capita GDP of $48,251 (R840,191) in 2020 compared with $6,542 (R113,915) for bottom-quartile countries. And poverty rates are lower. In the top quartile, 2.02% of the population experienced extreme poverty ($1.90 or R33 a day) compared with 31.45% in the lowest quartile.
Life expectancy is 80.4 years in the top quartile compared with 66 in the bottom quartile.
“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” McMahon said.
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