Sri Lanka Slips in Economic Freedom

Originally appeared in the The Island, Daily Mirror, Economy Next, Lanka Business online, NewsWire

Sri Lanka ranks 116 out of 165 jurisdictions included in the Economic Freedom of the World: 2023 Annual Report, released by Advocata Institute in conjunction with Canada’s Fraser Institute. The current ranking represents a decline in the economic freedom of the country which ranked 104th during 2020.

The report measures the economic freedom of individuals—their ability to make their own economic decisions—by analyzing the policies and institutions of 165 jurisdictions. The policies examined include regulation, freedom to trade internationally, size of government, legal system and property rights, and sound monetary policy. The 2023 report is based on data from 2021, the last year with available comparable statistics across jurisdictions.

Sri Lanka’s decline in score was driven by 4 out of the 5 sub indicators of economic freedom registering declines in their respective individual scores. These indicators are the size of government, access to sound money, freedom to trade internationally, and the regulation of credit, labour, and business. The only indicators that registered an improvement in its score is the indicator of legal system and property rights.

“The report captured a stark warning: Sri Lanka's economic freedom declined prior to the economic crisis of 2022, a testament to the vulnerability of nations with limited economic freedom in the face of economic turmoil. If the country is to recover, Sri Lanka must prioritize economic growth within the framework of maximising economic freedom for its citizens to trade, work, and transact freely in a stable monetary and fiscal environment” said Dhananath Fernando, Chief Executive Officer at the Advocata Institute.

The number one spot is now occupied by Singapore, followed by Hong Kong, Switzerland, New Zealand, the United States, Ireland, Denmark, Australia, the United Kingdom, and Canada. Other notable countries include Japan (20th), Germany (23th), France (47th) and Russia (104th).

Venezuela once again ranks last. Some countries such as North Korea and Cuba can’t be ranked due to lack of data.

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It’s the world’s premier measure of economic freedom.

The report was prepared by Professor James Gwartney of Florida State University and Professors Robert A. Lawson and Ryan Murphy of Southern Methodist University.

According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives.

For example, countries in the top quartile of economic freedom had an average per-capita GDP of US$48,569, compared to US$6,324 for bottom quartile countries. Poverty rates are lower. In the top quartile, less than one per cent of the population experienced extreme poverty (US$1.90 a day) compared to 32 per cent in the lowest quartile. Finally, life expectancy is 81.1 years in the top quartile of countries compared to 65 years in the bottom quartile.

“Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier and healthier lives,” Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute said.

See the full report at www.fraserinstitute.org/economic-freedom.

About the Economic Freedom Index

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories.

Economic Freedom of the World measures how policies and institutions of countries support economic freedom. This year’s publication ranks 165 countries and territories. The report also updates data in earlier reports where data has been revised.

For more information on the Economic Freedom Network, datasets, and previous Economic Freedom of the World reports, go to www.fraserinstitute.org/economic-freedom.

Economic crisis to reverse SL’s gains in economic freedom

Originally appeared in the Daily Mirror, Daily News, The Morning

Sri Lanka ranks 89 among 165 jurisdictions on the Economic Freedom of the World index. 

Colombo, Sri Lanka— Sri Lanka ranks 89  out of 165 countries and territories included in the Economic Freedom of the World: 2022 Annual Report, released by the Fraser Institute in association with the Advocata Institute in Sri Lanka.

Hong Kong and Singapore top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, Denmark, Australia, the United States, Estonia, Mauritius, and Ireland round up the top 10.  

Research shows that people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, nations in the top quartile of the economic freedom index had an average per-capita GDP of $48,251 in 2020, compared to $6,542 for nations in the bottom quartile (PPP constant 2017, international US $).

In the top quartile, the average income of the poorest 10% was $14,204, compared to $1,736 in the bottom quartile (PPP constant 2017, international US $). The average income of the poorest 10% in the most economically free nations is more than twice the average per-capita income in the least free nations. 

Sri Lanka’s ranking for Economic Freedom

The report, which is based on data until 2020 shows that Sri Lanka gained 11 places to be ranked 89th compared to the previous year where the country was ranked 100. However, Sri Lanka’s overall score has remained the same (6.72), which suggests that the improvement in ranking is due to a decrease in economic freedom in other countries.

 Sri Lanka’s score in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom)

“Improvement of Sri Lanka’s ranking on the Economic Freedom index is welcome, but we have to note the data is based on upto the year 2020 and the ground reality today is the economy has deteriorated further as Sri Lanka defaulted on its sovereign debt for the first time in history," Said Dhananath Fernando, CEO of Advocata Institute.

"Hence, it is quite evident that due to the ongoing economic crisis in Sri Lanka several of these indicators, if measured now, are going to paint a different picture, especially in the areas of access to carryout international transactions unhindered and the freedom to trade.”

Based on Advocata’s own calculations with 2021 data, the access to sound money has fallen.

"In the process for Economic Recovery, Economic Freedom is the best framework to structure our reforms, especially on reforms that target Economic Freedom will not only provide stability but also ensures economic growth and higher quality of life for our citizens,“ Fernando further stated

About the Economic Freedom Index

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It’s the world’s premier measurement of economic freedom, measuring and ranking countries in five areas—size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business.

This year’s publication ranks 165 countries and territories. The report also updates data in earlier reports where data has been revised.

For more information on the Economic Freedom Network, datasets and previous Economic Freedom of the World reports, visit www.fraserinstitute.org. And you can “Like” the Economic Freedom Network on Facebook at www.facebook.com/EconomicFreedomNetwork. See the full report at www.fraserinstitute.org/economic-freedom.

NEWS RELEASE: Sri Lanka ranks 83 among 162 jurisdictions on the Economic Freedom of the World index

NEWS RELEASE

Originally appeared in the Daily FT, Daily Mirror, Ceylon Today, Economy Next, Colombo Telegraph , Lanka Business Online, Ada Derana, Sunday Observer and Daily News

Colombo, Sri Lanka— Sri Lanka ranks 83  out of 162 countries and territories included in the Economic Freedom of the World: 2020 Annual Report, released by Canada’s Fraser Institute in association with the Advocata Institute Sri Lanka. 

Hong Kong and Singapore top the index, continuing their streak as 1st and 2nd respectively. New Zealand, Switzerland, the United States, Australia, Mauritius, Georgia, Canada, and Ireland round out the top 10.  

Research shows that people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives. For example, countries in the top quartile of economic freedom had an average per-capita GDP of $44,198 in 2018 compared to $5,754 for countries in the bottom quartile.

Moreover, in the top quartile, the average income of the poorest 10 percent was $12,293 compared to $1,558 in the bottom quartile. Interestingly, the average income of the poorest 10 percent in the most economically free countries is more than twice the average per-capita income in the least free countries.

Sri Lanka’s ranking for Economic Freedom

According to the Fraser Institute Report on Economic Freedom,  Sri Lanka gained 15 places to be ranked 83 compared to the previous year where the country was ranked 98. Sri Lanka’s scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):

“It is noteworthy that this 2020 annual report is based on the data for 2018. If it were based on the data for 2018, 2019, and 2020, for Sri Lanka, there could have been a different score, most likely a lower rank and a smaller score compared to 83 and 6.88 for 2018,” commented Dr Sarath Rajapatirana,  Chair of the Academic Programme at the Advocata Institute.  “This is based on the categories: 1. Size of Government, 2: Legal System and Property Rights, 3: Sound Money,  4: Freedom to Trade Internationally, 5: Regulation. During this period the size of Government increased, freedom to trade did not improve with para-tariffs still in place while regulations were not clearly defined.  With COVID 19 pandemic coming into Sri Lanka in March 2019, economic freedom had to be curtailed with a complete lockdown of activities. But this was a precautionary strategy. Without a lockdown, it could have been worse. Sri Lanka did better than most countries. The danger is that the measures adopted could be retained which would restrain economic freedom beyond what was necessary to restrain the virus. “  he went on to say.

Sri Lanka is particularly weak in the category related to “Legal System and Property rights” in the index with little improvement from last year’s report.   According to Professor Sirimal Abeyratne Professor in Economics at the University of Colombo and advisor to Advocata Institute,   "Economic freedom requires discipline and discipline is constituted by the rule of law. Proponents of economic freedom lose ground when they forget this. Opponents of economic freedom look smart when they ignore this. Economic freedom ensures the prosperity of a nation, only when it is founded on the rule of law."  

About the Economic Freedom Index

The Fraser Institute produces the annual Economic Freedom of the World report in cooperation with the Economic Freedom Network, a group of independent research and educational institutes in nearly 100 countries and territories. It’s the world’s premier measurement of economic freedom, measuring and ranking countries in five areas—size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labour and business.

This year’s publication ranks 162 countries and territories. The report also updates data in earlier reports where data has been revised.

For more information on the Economic Freedom Network, datasets and previous Economic Freedom of the World reports, visit www.fraserinstitute.org. And you can “Like” the Economic Freedom Network on Facebook at www.facebook.com/EconomicFreedomNetwork. See the full report at www.fraserinstitute.org/economic-freedom.

Advocata spokespersons are available for live and pre-recorded broadcast interviews via 077 621 6788

CONTACT:

Yasodara Kariyawasam,

Communications Manager, Advocata Institute

Email: yasodhara@advocata.org