The 21st edition of the Index of Economic Freedom has just been released by The Heritage Foundation and The Wall Street Journal.
Economic freedom is defined as the absence of any ability to coercion or constraint by the government on the production, distribution or consumption of goods and services beyond what is necessary to protect and maintain citizens' liberty.
Launched in 1995, the Index evaluates countries in four broad policy areas that affect economic freedom: rule of law; limited government; regulatory efficiency; and open markets. There are 10 specific categories: property rights, freedom from corruption, fiscal freedom, government spending, business freedom, labour freedom, monetary freedom, trade freedom, investment freedom, and financial freedom.
The 2015 world ranking (a total of 186 countries) is led by Hong Kong (89,6 of 100), Singapore (89,4) and New Zealand (82,1). Luxembourg ranks 21st globally with a score of 73.2 out of 100, and is well-regarded as "mostly free". Germany ranks 16th (73,8), the Netherlands 17th (73,7), Belgium 40th (68,8) and France 73rd (62,5) in the world rankings.
Luxembourg is ranked 10th out of 43 countries in the Europe region, and its overall score continues to be above the world and regional averages.
Source: The Heritage Foundation (2015)
In conclusion, the Heritage Foundation has noted the following observation in respect of Luxembourg:
"Small and landlocked, Luxembourg has made engagementwith the global economy the cornerstone of its economic policy. Investment freedom, the world’s most highly ranked, has led to the development of a robust banking sector. Regulations are relatively efficient, but labor markets are somewhat inelastic. Fiscal accounts must be managed more prudently for the economy to promote growth and return to the top ranks of the Index."