Ireland has the seventh freesest economy in the world, down from fifth place in 2001, according to the Economic Freedom of the World: 2003 Annual Report, published this morning.
The report, which was published by Ireland's Open Republic Institute(ORI) and by a 59-country network of other economic research institutes shows Ireland maintaining, for the second year in a row, its 7th place but falling, since 2001, from 8.5 — 5th place to 8.0.
According to the report, the key ingredients of economic freedom are personal choice, voluntary exchange, freedom to compete, and the protection of person and property.
The Open Republic Institute says the reasons for Ireland's decline include:
- the expanding burden of public expenditure — up by 5.2bn last year
- increasing taxes — a 20 per cent fall in one year
- increasing regulation of business — a 7 per cent fall
- increasing legal costs of complying with regulation —7 per cent fall
- rising cost of importing — a 5 per cent fall
"It's becoming clear that the state is increasing taxes, expanding its payroll and failing to remove regulatory barriers to enterprise," Mr Constantin Gurdgiev, ORI director, said.
"There is a danger that we will revert to the policies of the 1970s and 80s — from which we have only recently recovered."
Using 38 variables for each country the report measures the institutions essential to ensuring the rule of law, property rights, freedom to trade, sensible regulation, and reasonably sized government.
The index shows gains in economic freedom across the world. Based on the 10- point scale of this index, the average economic freedom rating was 6.35 for 2001, up slightly from 2000's average rating of 6.34.
Hong Kong retains the highest economic freedom rating, followed by Singapore, the United States, New Zealand, and the United Kingdom.
The first Economic Freedom of the World Report, published in 1996, was the result of decade's research by more than 100 leading scholars, including several Nobel Laureates, in a broad range of fields.
The Institute coordinates the Economic Freedom reports along with the Economic Freedom Network, a collaboration of member institutes in 59 nations.