Context: 

The Fraser Institute published the “Economic Freedom of the World 2024” report.

Key highlights of the report

Economic Freedom of the World Report Index ranked Hong Kong No. 1 among 165 jurisdictions with a score of 8.58.

The rankings of other major economies include Japan at No 11, Britain at No 12, Taiwan at No 19, India at No 84, and mainland China at 104.

India marked an improvement from 87th position last year to 84th this year.

Among the five areas of assessment, India’s ranking is as follows: - 

1) 126th in “freedom to trade internationally” and 

2) 102nd in “regulation”. 

3) 87th in “sound money”, 

4) 71st for “legal system and property rights” and 

5) 25th in “size of government”.

Methodology adopted in the report:

The index published in the report measures the degree to which the policies and institutions of countries permit people to make their own economic choices across 5 major areas.

The institute uses 45 data points—organized into the following five broad areas—to construct an overall index: - 

• Area 1: Size of Government: It measures the degree to which a country’s fiscal policies limit the scope of individual economic choice.
• Area 2: Legal System and Property Rights: Protection of persons and their rightfully acquired property is a central element of both economic freedom and human freedom.
• Area 3: Sound Money: Money’s value has a profound effect on people’s ability to make their own economic choices.
• Area 4: Freedom to Trade Internationally: It measures four trade restrictions: tariffs, quotas, hidden administrative restraints, and controls on exchange rates and the movement of capital.
• Area 5: Regulation: It measures the extent to which regulations that restrict entry into markets and interfere with the freedom of voluntary exchange reduce economic freedom. 
• Its four components account for credit market regulation, labor market regulation, business regulation, and freedom to compete.