What is the Index of Economic Freedom?

The index of economic freedom is used to measure the existing economic freedom in a given country. Twelve economic markers are used to perform its calculation. The index of economic freedom was created in 1995. Those responsible for its creation were The Heritage Foundation and The Wall Street Journal, who were inspired by the work "The Wealth of Nations" by Adam Smith for its elaboration.

Calculation of the index of economic freedom.

The index of economic freedom is calculated by evaluating twelve aspects related to the economy of a country. Using a score of or to 100, where zero is total absence of economic freedom and 100 is full economic freedom.

Spain obtains a score of about 65 points out of 100, which translates into moderate economic freedom. Placing itself in the 6th position on the list in which 180 countries participate. This score places us below countries such as Norway, Germany, Korea, Japan, Peru or Colombia.

Index of Economic Freedom Markers

The twelve markers that are valued in the calculation of the index of economic freedom are grouped into four axes: legal certainty, size of government, regulatory efficiency and openness of the mercado. Each of these axes is made up of three markers.

  • Legal security. It includes the indicators: property rights, government integrity and judicial effectiveness.
  • Government size. Includes the indicators: government expenditures, tax burden and fiscal health
  • Regulatory efficiency. Includes the indicators: business freedom, labor freedom and monetary freedom
  • Market opening.Includes the indicators: commercial freedom, financial freedom and investment freedom

Interpretation of the results of the economic freedom index.

The results obtained classify the economic freedom of each country.

  • Absence of freedom. Scores above 80.
  • Practically absent. Scores from 79,9 to 70.
  • Moderate Scores from 69,9 to 60.
  • Practically full. Scores from 59,9 to 50.
  • Full freedom. Scores less than 50.

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