Singapore Ranked As World’s Freest Economy in 2020 Index of Economic Freedom
According to the 2020 Index of Economic Freedom published by the Heritage Foundation, Singapore is now ranked as the world’s freest economy. The index defines economic freedom as “the fundamental right of every human to control his or her own labor and property”.
In economically free societies, individuals are able to work, consume, and invest as they please while governments allow labor, capital, and goods to move freely without coercion or constraint of liberties.
2020 Index of Economic Freedom Scoring System
The index ranks countries according to 4 main categories:
- Rule of Law
In a society where the rule of law is respected, property rights are effectively enforced while judicial processes are competent and reliable. The judiciary is also regarded as independent. The Singapore government is considered one of the world’s least corrupt and actively maintains a strong track record of anti-corruption practices.
- Government Size
This category looks at the country’s government spending, tax rates, and fiscal health. Singapore’s highest individual income tax rate is 22 percent, while the highest corporate tax rate is 17 percent. Singapore’s overall tax burden and government spending amount is healthy and reflects good rates.
- Regulatory Efficiency
Regulatory efficiency looks at how business regulations are carried out. Singapore has consistently ranked as one of the world’s most business-friendly country due to effective business regulations which help to create ideal business environments that attract top companies and talents.
- Open Markets
This category looks at trade, investment, and financial freedoms based on tariff rates and other regulations. Singapore’s tariff rates are healthy and nearly all economy sectors allow full foreign ownership. There is a sophisticated and thriving financial sector, while the number of foreign banks have steadily increased.
Singapore’s Overall Score
Singapore’s overall economic freedom score is 89.4 which is well above regional and world averages. It is the only country that scores well and is economically free across all categories.
It has surpassed Hong Kong to gain the top spot for the first time in 2020 due to its sustained economic performance which has contributed to one of the world’s highest per capita incomes and decent GDP growth rates.