Economic freedom choke in South Africa pushes country down the ranks, latest report reveals
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South Africa ranked 84 out of 165 countries and territories in the 2021 Annual Report of Economic Freedom of the World - which was released on Tuesday.
It was released by the think tank Free Market Foundation in conjunction with Canada’s Fraser Institute.
A director of the Free Market Foundation, Eustace Davie, said South Africa had adopted laws and regulations such as minimum wage laws and hiring and firing laws that had caused it to have one of the highest unemployment rates in the world, with 75% of young people between the ages of 15 and 24 unable to find jobs.
He said that applying a good dose of economic freedom to the problem would be the quickest and best way to resolve the matter and allow the unfortunate victims to get jobs.
“No one in political office who seriously wishes to improve conditions for their fellow citizens can afford to ignore the lessons to be learned from the annually produced Economic Freedom of the World Report. All they need do is page through it and see what other countries are doing right or doing wrong, to establish the best economic policies to follow to improve the lives of their own citizens,” Davie said.
Using Bulgaria as an example, Davie said it improved its rank on the index from 103 to 36 between 2000 and 2019 as it kept taxes low, reduced inflation from 409.7% to 1.20% per annum, and improved foreign trade conditions.
In 2000, South Africa ranked 58 on the list of countries analysed.
In the latest report – and where a higher value indicated a higher level of economic freedom – South Africa scored in key components of economic freedom.
The country’s value in size of government changed to 7.00 from 5.59 in the last year’s report, its legal system and property rights value changed to 5.95 from 6.36 and access to sound money changed to 8.25 from 8.10.
South Africa’s freedom to trade internationally score changed to 6.50 from 6.47 while its regulation of credit, labour, and business changed to 7.16 from 7.54.
The report was prepared by James Gwartney of Florida State University; Robert Lawson and Ryan Murphy of Southern Methodist University; and Joshua Hall of West Virginia University. It measures economic freedom such as levels of personal choice, ability to enter markets, security of privately owned property and rule of law by analysing the policies and institutions of 165 countries and territories.
The report revealed an important factor, that South Africa’s decline in the rankings showed it had been overtaken by 15 former communist countries. It also has seven African countries ahead of it on the economic freedom list.
Hong Kong and Singapore again top the index, continuing their streak as first and second respectively. New Zealand, Switzerland, Georgia, the US, Ireland, Lithuania, Australia, and Denmark round out the top 10.
The 10 lowest-rated countries were Central African Republic, Democratic Republic of Congo, Syria, Republic of Congo, Iran, Zimbabwe, Algeria, Libya, Sudan, and Venezuela.
Other notable rankings include Japan (18th), Germany (22nd), Italy (47th), France (53rd), Mexico (75th), Russia (100th), India (108th), Brazil (109th) and China (116th).
The report also cited research in top peer-reviewed academic journals that found people living in countries with high levels of economic freedom enjoyed greater prosperity, more political and civil liberties, and longer lives.
The life expectancy is 81.1 years in the top quartile of countries, compared with 65.9 years in the bottom quartile.