Global economic freedom declined for the third year in a row, the yearly ‘Economic Freedom of the World’ report published by the Canada-headquartered Fraser Institute shows.

“After decades of slow but steady increases, global economic freedom peaked in 2019 but has declined in each of the three years since then, which hasn’t happened since we began measuring economic freedom more than 25 years ago,” explains Fraser Institute senior fellow Matthew Mitchell, who also contributed to the report.

Economic freedom is the degree to which individuals are allowed to make their own economic decisions about what to buy, where to work and whether to start a business, according to the Institute.

Economic freedom measures openness to trade, tax and regulatory burdens, government spending, and the soundness of a country’s money.

In 2022 (the latest year of available data), Hong Kong was the most economically-free jurisdiction in the world (although its score has declined in recent years), followed by Singapore, Switzerland, New Zealand and the US.

At 17, Mauritius was the highest-ranked African country, while South Africa came in at 81. This is an improvement from last year, when, based on data from 2021, South Africa was at 85.  

According to one think tank, the Free Market Foundation (FMF), this slight improvement, while welcomed, should not engender an “overly optimistic view of the underlying fundamentals in the country”.

“Unfortunately, as is indicated in the summary scores themselves, the relative improvement in South Africa’s ranking was largely driven by comparative declines in economic freedom among other countries and not by meaningful reform in our own jurisdiction.

“Therefore, while we are happy to see South Africa climb the rankings, we would certainly prefer gains in relation to our scores,” FMF CEO David Ansara says.

South Africa’s score in the key components of economic freedom (from one to ten where a higher value indicates a higher level of economic freedom) is outlined below.

• Size of government increased from 6.10 in last year’s report to 6.17.
• Legal system and property rights increased from 6.76 to 6.78.
• Access to sound money decreased from 7.86 to 7.60.
• Freedom to trade internationally increased from 6.42 to 6.96.
• Regulation fell from 6.74 to 6.73.

“An analysis of these key components suggests that economic freedom remains stagnant in South Africa. Sadly, albeit predictably, this stagnation has been reflected in sluggish economic growth and accelerating unemployment,” Ansara posits.

The rankings of other major countries in the report include Canada at eight, Japan at 11, the UK at 12, Germany at 16, Taiwan at 19, Korea at 32, France at 36, Mexico at 65, India at 84, Brazil at 85, China at 104 and Russia at 119.

The ten lowest-ranked countries are Yemen at 156, Libya at 157, Iran at 158, Argentina at 159, Myanmar at 160, Algeria at 161, Syria at 162, Sudan at 163, Zimbabwe at 164 and Venezuela at 165.

According to the report, per-person GDP in countries in the top quartile of economic freedom was $52 877 in 2022 compared with $6 968 for bottom quartile countries.

Also, in the top quartile, 1% of the population experienced extreme poverty (living on less than $2.15 a day) compared with 30% in the lowest quartile.

The report also says that life expectancy is 80.5 years in the top quartile of countries compared with 64.9 years in the bottom quartile.