Marginal improvement in economic freedom
KATHMANDU,JAN 13:
At a time, when the country is preparing to observe Nepal Investment Year to woo foreign investors, a report showed that the country’s economic freedom has not deteriorated, if not improved, and ranked as 147th freest in the 2012 Index.
Nepal’s economic freedom score is 50.2 — an improvement by 0.1 — from last year, with an improvement in investment freedom offset by deterioration in business freedom,” according to the 18th annual Index of Economic Freedom released today by The Heritage Foundation and The Wall Street Journal.
However, the report revealed that economic freedom has declined worldwide in 2011 as many countries attempted — without success — to spend their way out of recession. “The global average economic freedom score for the 2012 Index stands at 59.5 — on a scale in which 100 represents the ideal — down two-tenths of a point from 2011.”
The Index that covers 10 freedoms — from property rights to entrepreneurship in 184 economies across the world — ranked Nepal 32nd out of 41 countries in the Asia–Pacific region, though its score remains far below world and regional averages.
Nepal’s statist approach to the economy continues to hold development progress far below the country’s potential, it said, adding that the foundations of economic freedom are extremely weak, and corruption, a lack of transparency, and a burdensome business approval process impede much-needed expansion of private investment and production. “Property rights are poorly protected by the inefficient judicial system, which is subject to substantial political influence.”
Overall, the economy lacks the entrepreneurial dynamism for broad-based economic growth and sustainable long-term development, the report said. Its scores for investment freedom and financial freedom are among the worst in the world. State interference continues to hurt regulatory efficiency, and there has been little effort to open the economy or engage in world markets. Lingering political instability undermines the government’s ability and willingness to implement necessary economic reforms, according to the annual report that ranked Hong Kong and Singapore the first and second freest economies for the 18th straight year. Australia and New Zealand ranked third and fourth, and Switzerland fifth followed by Canada, Chile, Mauritius, Ireland and the US under the top 10 free economies.
Economic freedom is not only a crucial component of liberty but it also reveals level of poverty and economic growth as it empowers people to work, produce, consume, own, trade, and invest according to their personal choices. Economic freedom matters the most as only an economically free nation can compete in the global market.
The indicators
Economic freedom is measured under four headings; Rule of Law, Limited Government, Under Rule of Law, Regulatory Efficiency and Open Market. Nepal’s economic freedom has also ben measured with these indicators. Under Rule of Law, Freedom From Corruption is still repressed, though the situation improved from 2006 and Property Rights has been mostly repressed from 1997-2001 and repressed level since 2001. Under Limited Government, there has been no change in Fiscal Freedom since 1996, and government spending has plunged. Under Regulatory Efficiency, Business Freedom has been down from earlier mark in 2011, whereas the country is categorised under mostly un free for Labour Freedom sin-ce 2005 and Monetary Freedom is equal to neighbours. Under Open Markets, Trade Freedom has lowered since 2003. Similarly, Investment Freedom has started looking downward since 2007 with slight improvement in 2011, though there is more financial freedom in Nepal than India and China.
Source: THT
