Each year, the "Index of Economic Freedom," jointly published by the Heritage Foundation and The Wall Street Journal, examines the relative strength of 10 key economic variables in 157 countries around the world. Among those variables are property rights; monetary stability; and freedom from government interference, trade restrictions, business regulations, and government corruption. Using these measures of economic freedom, the Index assigns a score to each country, with 100 being the highest possible grade.
As of 2007, Hong Kong and Singapore ranked as the world's two economically freest countries, with freedom scores of 89 and 86 percent, respectively. Rounding out the top 10 most-free economies were Australia (83), the United States (82), New Zealand (82), the United Kingdom (82), Ireland (81), Luxembourg (79), Switzerland (79), and Canada (79).
At the other end of the spectrum were the world's least-free countries. North Korea, with a freedom score of 3 percent, ranked dead last. Just above North Korea, in 156th place, was Cuba, with a freedom index of 30. Above that, in ascending order, were: Libya (34), Zimbabwe (36), Burma (40), Turkmenistan (42), Congo (43), Iran (43), Angola (43), and Guinea-Bassau (45).
The "Index of Economic Freedom" displays a color-coded map showing countries that are categorized broadly under five distinct headings: "free," "mostly free," "moderately free," "mostly unfree," and "repressed." A vast majority of the world's poor people reside in the "mostly unfree" and "repressed" countries. In short, the wealth or poverty of various countries is best explained by the amount of economic freedom their peoples enjoy, and by the extent of control their governments exert over economic matters.
It should be noted that economic freedom is not necessarily correlated with democracy. For instance, India is politically a democracy, but economically it is "mostly unfree" and poor, ranking 104th in economic freedom. By contrast, there are countries on the economic freedom index that have little history of democracy but are far wealthier than some of their more democratic counterparts. Chile, for example ranks 11th; Taiwan ranks 26th. This is because their economic systems are "free" or "mostly free" -- traits that are not guaranteed by a democratic political system.
It is also noteworthy that foreign aid, International Monetary Fund bailouts, and other handouts to impoverished nations tend to keep their intended beneficiaries poor. "Except for immediate disaster relief," writes economist Walter E. Williams, "[providing] foreign aid is probably the worst thing the West can do for poor countries. After all, how much foreign aid is necessary for a country to create the foundations for growth: rule of law, enforcement of contracts, and private property rights protection?"
Adapted from: "World Poverty," by Walter E. Williams (February 7, 2007).