The authoritative Economic Freedom of the World (EFW) 2014 Annual Report puts Nigeria near the bottom of the barrel – 125th out of the 152 countries ranked.
Since its first publication in 1996, numerous studies have used the data published in Economic Freedom of the World to examine the impact of economic freedom on investment, economic growth, income levels, and poverty rates.
“The link between economic freedom and prosperity is undeniable. The most economically free countries offer the highest quality of life and personal freedoms while the lowest-ranked countries, are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens,” said Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute.
The Economic Freedom Index is a summary that measures the degree of economic freedom in five broad areas: Size of Government: Expenditures, Taxes, and Enterprises; Legal Structure and Security of Property Rights; Access to Sound Money; Freedom to Trade Internationally; Regulation of Credit, Labour, and Business.
According to the report, based on 2012 statistics (the most recent year of available data), Nigeria received a rating of 6.2 and was ranked 96th based on the size of its government.
On legal system and property rights in the country, Nigeria was rated 3.4 and ranked 139th.
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On the area of Sound money, Nigeria was ranked 106th with a rating of 7.5. Freedom to trade internationally saw Nigeria ranked 105 with a rating of 6.7 while receiving a rating of 7.2 (ranked 67) in the area of regulations.
In the area of credit market regulations, Nigeria ranked 17th (rated 9.8), while in the area of Labour market regulations, Nigeria ranked 31st (rating of 7.9).
However, Nigeria ranked 149th with a poor rating of 4.0 in the area of Business Regulations.
The EFW index now ranks 152 countries and territories. Data are available for approximately 100 nations and territories back to 1980, and many back to 1970.
This data set makes it possible for scholars to analyze the impact of both cross country differences in economic freedom and changes in that freedom across a three-decade time frame.
Sub-Saharan Africa saw a steep decline from the late 1990s, and only recently has again shown a rising trend.
Mauritius, Africa’s highest ranked nation, ranked 5th, followed by Rwanda, ranked 29th, Uganda and Zambia ranked 57th and 65th respectively.
South Africa was ranked 93rd, while West African neighbours Ghana was joint 98th with Russia.
Kenya ranked 77th, Tanzania 94th and Tunisia 96th where amongst the few African countries in the top 100 summary Economic Freedom Ratings for 2012.
Hong Kong, Singapore occupy the top three spots respectively while the US and UK are joint 12th on the ratings. China, India and Brazil where ranked 115th, 110th and 103rd respectively.
The 10 lowest-rated countries are: Myanmar, Democratic Republic of Congo, Burundi, Chad, Iran, Algeria, Argentina, Zimbabwe, Republic of Congo, and, lastly, Venezuela which retains the title of the world’s least economically free country.
The index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom.
“Economic freedom is present when individuals are permitted to choose for themselves and engage in voluntary transactions as long as they do not harm the person or property of others. Individuals have a right to their own time, talents, and resources, but they do not have a right to take things from others or demand that others provide things for them.
The use of violence, theft, fraud, and physical invasions are not permissible in an economically free society, but otherwise, individuals are free to choose, trade, and cooperate with others, and compete as they see fit”, according to the report.
The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property.
DAN OJABO
