Economic freedom – for individuals, the liberty to work, produce, consume and invest; for countries, the licence by which legitimate labour, capital as well as goods and services can move unrestrained. For many people and the countries in which they live, such freedoms are taken for granted; for others they remain hopelessly elusive.
Of the benefit to individuals, renowned Austrian School economist, Ludwig von Mises (1881-1973), had this to say: “The meaning of economic freedom is this: that the individual is in a position to choose the way in which he wants to integrate himself into the totality of society”.
Of the benefit to national economies, Adam Smith (1723-1790), the pathfinder of free-market economics, put it plainly: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice”. We can add to that short list, political will.
For even in those countries where there is economic freedom – countries whose governments claim to support that concept – often as not, this is by degrees; the tap is turned on only as far as those governments deem it within their political interest to do so.
The 2017 Economic Freedom Index (EFI) – produced by the prestigious Washington-based think tank, The Heritage Foundation – ranks 186 countries world wide on the level of their economic freedom. Here, economies are also bracketed according to the extent of that freedom – they’re assessed to be either, Free, Moderately Free, Unfree, Repressed or Unranked.
Produced for the past 20 years and a much-used source of information for investors searching for new markets, the EFI evaluates each country’s economic-freedom quotient by means of four pillars – ‘Open Markets’, ‘Regulatory Efficiency’, ‘Government Size’, and ‘Rule of Law’ –each containing three freedom criteria. These we shall be looking at in turn in this, the latest infographic series from The Volatilian™.
As the EFI states in its explanation of the Index: “Economic freedom brings greater prosperity … The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination”.
These are all things which the Philippines – and its peers in the Association of Southeast Asian Nations (Asean) – have pledged to deliver; though in terms of democracy, to greater and lesser degrees. After all, effectively, Cambodia, Laos and Vietnam are all one-party states; Myanmar is a fledgling democracy and is treading lightly, while Thailand is currently ruled by a military junta.
We’ve organised the 2017 EFI results to show where the Philippines comes in the context of the 10 Asean states. Here, then, is how all members of that grouping stacked up in terms of their global rankings.
Free: Singapore, 2nd; Malaysia, 27th. Moderately Free: Brunei, 35th; Thailand, 55th; Philippines, 58th; Indonesia, 84th. Mostly Unfree: Cambodia, 94th; Laos, 133rd; Myanmar, 146th; Vietnam, 147th.
So, the Philippines is fifth in the deck and designated as Moderately Free. But while it comes ahead of Cambodia and Laos – which of course we would expect it to – what’s particularly significant is how far it comes ahead of one of its biggest Asean rivals, Vietnam.
Over the past eight years, the Philippines has made tremendous progress in terms of freeing up its economy. On the 2010 EFI, it was ranked 109th – that’s 51 slots lower than it is today. That said, there’s still a long way to go before it can comfortably take its place towards the front of the Asean bloc. Third place is certainly doable; with the right commitment, in time, so is second.
There’s no question that countries which provide economic freedom for their people, progress better than economies that don’t; economic freedom would seem to be intrinsic to economic prosperity. For example, on the 2017 EFI, the world’s 25 poorest countries all fall within the Mostly Unfree and Repressed brackets, while 18 of the world’s 25 richest countries fall within the Free and Mostly Free brackets.