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The Country of No Freedom
Ukraine has never been so economically unfree in history: 150th place out of 165 countries in the Index of Economic Freedom-2024
16 October, 2024
Economic Freedom
Governance and Regulations
Competitiveness
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Depressing news for Ukraine was announced today by the Canadian think tank Fraser Institute, which published one of the most anticipated annual indices, "Economic Freedom of the World 2024".
Our country took 150th place out of 165 countries - we have never fallen so low in the history of changes in economic freedom since Ukraine was added to the Index.
An excellent report by the world's largest network of think tanks studying economic freedom first ranked Ukraine 118th in 1995 with a score of 3.46.
In 2000, Ukraine dropped to 140th place with an index of 4.45 points, and for the next 12 years we fluctuated between 120-140th place.
2012 brought Ukraine 115th place with a score of 5.96 points, but the result was lost and by 2015 we were sliding lower and lower, but the lowest score before this year was 144th place.
The best indicator of the Index of Economic Freedom of Ukraine for all years of research was in 2020, when our country took 109th place with a result of 6.19 points.
However, already the following year, the country began its falling - 113th place with an indicator of 6.06 points. Over the year, Ukraine fell 37 places, losing 0.94 points in the Index. This is a very big loss, the strongest inclination towards economic unfreedom.
It should be mentioned that the presented index is calculated based on the results of 2022, not the current year. There is great doubt that the research in 2023 and 2024, which the ILI will definitely write about in the future, will be optimistic. The 2024 Index is based on 2022 data to include and account for all relevant data. The lag between the index year and the data is two years. For example, the 2004 index is data for 2002. Further, the tables show the year of data collection.
According to the Index of Economic Freedom 2024, Ukraine has become the leader in the deterioration of the indicator of economic freedom among all countries of the world.
Who are our neighbors in this ranking? Burundi (149), Ethiopia (148), Iraq (147), Chad (151), Congo (152), Central African Republic (153).
Consider this fact: Ethiopia has greater economic freedom than the European country Ukraine!
Moldova has moved from 57th place in the Index-2023 to 89th place this year.
It is bitter to know that the aggressor countries Russia and Belarus are also ahead of Ukraine in the Index of Economic Freedom, occupying 119 and 112 places, respectively.
The freest countries in the world
The most economically free countries in the world are:
- Hong Kong (China)
- Singapore
- Switzerland
- New Zealand
- USA
- Denmark and Ireland
There should be cheering for Canada (8), Australia and Luxembourg (9).
Estonia has also entered the Top 20 (20th place). Next comes Georgia (21).
Greece and Poland are the lowest in the ranking of countries by the level of economic freedom among the EU countries - in 70th place with an indicator of 6.85 points
13 EU countries are in the Top 30 Index of 2024 from the Fraser Institute, which means that more than 48% of all EU members understand and value economic freedom, making it the basis of their development.Share
The weakest link of the Ukrainian economic policy is currency
The second problem of the Ukrainian economy is state regulation. In 2022, according to this group of indicators, Ukraine took 152nd place with an indicator of 4.67 points, because back in 2021 we had 122nd place and 5.89 points.
Conclusion: during the war, instead of liberalizing, deregulating and liberating business, the Government, on the contrary, has complicated the regulatory burden. Let us remind you that, according to the Institute's estimates, it is ~15-17% of GDP or more than $30 billion. With such shackles on the feet and hands in the conditions of tremendous military threats, regular energy blackouts and mobilization blackmail of the workforce, the very fact of the Ukrainian business activity is a miracle.
It should be noted that in 2019, the size of the state in Ukraine was estimated at the level of the 73rd place. Therefore, the fact of nationalization of the country's economy, which already suffers from the dominance of the State, has noticeably accelerated in recent years.
The world average indicator of the Index of Economic Freedom, calculated for 165 countries, was 6.56 points ("10" is the highest level of freedom).
Since the peak year of 2019 (6.8 points), the economic freedom has been steadily decreasing.
Today, its level corresponds to the level of the end of the last decade. The fragile, weak achievements of the last 15 years have been destroyed not by a hurricane or another natural phenomenon, but by... the State. Through monetary, fiscal and regulatory policies, the state restricts human freedom under attractive slogans, declaring noble goals: sustainable development, fighting poverty and climate change, ensuring diversification, equality and inclusiveness, countering global threats and ensuring global human rights. In fact, VIP-disposers and consumers of other people’s property are getting rich and the single fair competitive field is being destroyed, discrimination and the power of monopolists is increasing. The actions of the State are distorting the entire economy, so ~3% of the population is earning the bill from ~97% of the rest. As a result, the country is losing competitiveness and productivity. Erosion of trust is increasing transaction costs and creating the basis for the authoritarianism of the oligarchy.
This is how a vicious circle of economic nationalization works. Bright, convincing confirmation of the biblical "the road to heaven is paved with good intentions." It is one thing when nice words, slogans and memes are applauded by ordinary people who still have not considered it necessary to understand what inflation is, how much they actually pay in taxes and what they get in return. It is another thing when Leviathanism (inculcation of the State) is uncritically perceived, planted by political, civil and economic elites.
The 2024 Index is based on 2022 data to include and account for all relevant data. The lag between the index year and the data is two years, the data year is specified. Source: Economic Freedom of the World 2024. Frazer Institute. October 16, 2024.
If you divide all the countries of the world into four groups according to the level of economic freedom, then in the first quartile (25% of the freest countries in the world) the GDP per capita will be $52,877. This is 8 times more than the 25% of the most economically unfree countries - $6,968.
More facts for thought? Here you are:
- In economically free countries, the poorest 10% earn $7,610 per year, and in economically unfree countries - only $952.
- In the most economically free countries, the average person lives 16 years longer than in economically unfree countries.
- In the most economically free countries, child mortality is 9 times lower than in economically unfree ones.
- In economically free countries, only one percent of the population lives in poverty. In economically unfree countries, there are 30% of such people.
- In economically free countries, 40% more citizens claim that they are satisfied with their lives than in economically unfree countries.
Frazer Institute and its colleagues in the network of the liberalism philosophy around the world have demonstrated a positive influence of economic freedom on the financial, social, environmental, and production parameters of human activity for more than 30 years.
It is to be regretted that the Ukrainian elites, the government and the society for more than 30 years have not realized and have not accepted economic freedom as the foundation of their national strategy for a long-term growth and development.
As the saying goes, you can lead a horse to a watering hole, but you can't make it drink. This is the case with Ukraine. It would seem natural, because Ukraine is a country with freedom and will in its heart and in its cultural code! Over the past 20 years, Ukrainians have held three revolutions with the slogans "Freedom is our religion."
Our brave soldiers, soldiers and officers, sacrificing their lives, protect our freedom and yours from the Nazi enemy. It would seem, take this freedom. Do it in practice, put it into practice - and you will have security, well-being and rapid growth. You will have population growth, investments, high technologies, entrepreneurial drive and a worthy place in the world. However, Ukraine, as before, remains in the grip of the curse of Marxism, Leviathanism, a blind, stupid faith in the Great Power (but do not confuse the bureaucracy with the greatness of the country and the people).
We need a real Revolution of Ideas, so that every Ukrainian elects their representatives to the parliament, the president, and local authorities not for conditional buckwheat, a good performance, sweet complex speeches in the nightingale Ukrainian language, not for a set of promises of a rich life at someone else's expense.
Ukraine needs the first government and parliament in its history aimed at economic freedom. We need our own Javier Miley, who will cut off the tentacles of the Ukrainian Leviathan with a saw and an ax.
Download the full article and infographics in the pdf below.
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Economic Freedom
Governance and Regulations
Competitiveness
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Yaroslav Romanchuk
A well-known Ukrainian and Belarusian economist, popularizer of the Austrian economic school in the post-Soviet space. He specializes in reforms in transitional economies in the post-socialist space.
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