Report: MENA region lags behind in race for economic freedom
The level of economic freedom remain unchanged overall in the Middle East and North Africa (MENA) region over the last year, with eight countries losing ground and eight others improving, reports the 2004 Index of Economic Freedom, recently released today by the Heritage Foundation and Wall Street Journal .
"A country's level of economic freedom is critical," said index editor Marc Miles. "Countries with the highest levels of economic freedom also have the highest living standards."
Not one of the 18 countries ranked from the MENA region was classified as “free.” Bahrain remained the most economically free in the region, even though its overall score dropped from the 2003 Index. It leads in the region by maintaining "a pro-business environment," the editors say, with "strong property rights, low regulation and a low level of activity in the informal market." Still, Bahrain could improve by privatizing more industry to encourage foreign investment.
Israel moved into second place in the region this year, up one spot from the 2003 Index. The editors credit Finance Minister Benjamin Netanyahu and say that if his policies prevail, Israel will see more privatization and less public-sector growth.
The United Arab Emirates (UAE) dropped one spot to number 3 in the region; its overall score worsened by the third-largest margin worldwide. The plunge was attributed to a drop in ratings for fiscal burden of government, banking and finance, wages and prices and informal market categories.
Libya again trails all other countries in the region. Its economy is considered "repressed," and the editors note that Tripoli's new "fiscal burden of government" score is actually worse than last year's. "With the exception of a low inflation rate, Libya needs to show significant improvement in all factors," they say.
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 black market activity. Countries are rated one to five in each category, one being the best, five the worst. These ratings are then averaged to produce the overall Index score.
Worldwide, the scores of 75 countries are better, the scores of 69 are worse, and the scores of 11 are unchanged from last year's Index. Of the 155 countries ranked this time, 16 are classified as "free," 55 are "mostly free," 72 are "mostly unfree," and 12 are "repressed."
According to the index, Asia contains the world’s three freest economies: Hong Kong, Singapore and New Zealand. The North America/Europe grouping boasts seven of the top 10 most economically free countries, including Ireland, Estonia and the United States. Sub-Saharan Africa, by contrast, has no free economies. — (menareport.com)
© 2004 Mena Report (www.menareport.com)