You are hereHome Top News
Study shows Mideast economic freedom 'mixed'
Source: BI-ME , Author: BI-ME staff
Posted: Mon January 9, 2006 12:00 am

INTERNATIONAL.  The past year was a winning one for economic freedom, according to the 2006 Index of Economic Freedom, just released by The Heritage Foundation and Wall Street Journal. The Heritage Foundation is a conservative policy research think tank based in Washington DC, US.

Out of the 157 countries graded in the Index, 99 saw improved scores this year, and the average country score now falls into the “mostly free" category for the first time ever. Because economic freedom is linked with economic growth and prosperity, this is an important development.

Once again, Hong Kong and Singapore lead the pack, followed by Ireland, which jumped several spots. The US is back in the top ten ranking, after its first year out, due to narrow cuts in government spending and lower tariffs.

However, the Middle East and North Africa saw their levels of economic freedom decline over the last year, according to the 2006 Index.

The editors - Marc Miles, Kim Holmes and Mary Anastasia O’Grady - noted that there have been mixed trends in the region over the last ten years. Overall, the average Index score of its 17 countries has improved by 0.09 points, but the median score has worsened by 0.04. And the progress has come mainly from modest improvements by the region’s least-free economies.

The region hasn’t had an economy rated as “free” since 2001, but it does have two rated as “repressed”, Libya and Iran. Seven countries improved in this year’s Index, and ten declined.

Bahrain and Israel retained their number one and number two rankings, leading the region in economic freedom. Bahrain maintains a pro-business environment with an excellent banking and finance system, low regulation and low barriers to foreign investment. Yet it receives more than 80% of its revenues from state-owned enterprises, mostly oil and gas, which demonstrates an unhealthy level of government intervention in the economy. Declines of a full point in monetary policy and in property rights led to a worsened Index rating for Bahrain this year.

The score for Israel improved, thanks in part to a 2% decline in its tariff rates (expressed as a weighted average), which led to a better score on trade policy. It continues, however, to maintain a high personal income tax, of 50%.

Kuwait, Jordan, Saudi Arabia and the UAE join Israel and Bahrain among the world’s “mostly free” economies. Lebanon sits just outside that category and is joined on the “mostly unfree” list by Oman, Qatar, Morocco, Tunisia, Algeria, Egypt, Yemen and Syria.

Libya, which registered the most improved score in the region, nevertheless remained in the “repressed” category at 4.16. It is joined there by Iran, which took the biggest step backwards in the world. Its score of 4.51 is 0.30 worse than last year and second-worst in the world, second only t North Korea. Once one of the more advanced in the Middle East, Iran’s economy is plagued with heavy regulation, high unemployment, inflation, corruption and government intervention, said The Heritage Foundation.

As in previous years, the Index ratings reflect an analysis of 50 different economic variables, grouped into 10 categories: banking and finance; capital flows and foreign investment; monetary policy; fiscal burden of government; trade policy; wages and prices; government intervention in the economy; property rights; regulation; and informal (or black) market activity. Countries are rated one to five in each category, one being the best and five the worst. These ratings are then averaged to produce the overall Index score.

Of the 157 countries ranked, 20 are classified as “free,” 52 as “mostly free,” 73 as “mostly unfree,” and 12 as “repressed.” Four countries - Congo, Iraq, Serbia-Montenegro and Sudan - were not ranked because the data was not deemed reliable. Two that had been suspended from the rankings - Angola and Burundi - were again ranked this year because of returning stability.

This is the 12th consecutive year The Heritage Foundation and The Wall Street Journal have published the Index. Marc Miles is Director of The Heritage Foundation’s Centre for International Trade and Economics, Kim Holmes is Heritage’s Vice President for Foreign Affairs, and Mary Anastasia O’Grady is a member of the Wall Street Journal’s editorial board and edits the 'Americas' column.

See also: www.heritage.org

 

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: June 26, 2019
UAE. Positive price movement demonstrates success of UAE's diversification drive; Dubai (21), Abu Dhabi (33) and Riyadh (35) rank among the most expensive cities for expatriates in the Middle East.
date:Posted: June 25, 2019
UAE. There were a number of iconic deals completed in Q1 FY19 which include: Network International IPO, acquisition of Careem by Uber, Saudi Aramco bond listing and investment into ADNOC pipeline and refinery assets by international investors.
date:Posted: June 24, 2019
UAE. The latest edition of PwC's Middle East Economy Watch looks at the recent oil price rebound and its mixed impact on regional economies.