Nepal’s ranking in economic freedom index has improved significantly. This is what the annual report titled ‘Economic Freedom of the World: 2015 ‘, unveiled today by Samriddhi Foundation in conjunction with Canada-based Fraser Institute, showed.
The report was prepared based on five measures — namely, size of the government; legal structure and security of property rights; access to sound money; freedom to trade internationally; and regulation of credit, labour and business. Within the five major areas, there were 42 distinct variables and sub-components were placed on a scale from zero to 10 to reflect the distribution of underlying data.
The study had taken the base line data of 2013 to prepare the report for
With an overall score of 6.56 in a scale of zero to 10, where a higher value indicates a higher level of economic freedom, Nepal ranked in the 106th position out of 157 countries in this year’s index. Compared to last year, when Nepal ranked in 126th position out of 152 nations with a score of 6.16, the country has jumped up 20 places in the global ranking this year.
Based on the scores that the country has obtained on five different measures, Nepal needs to initiate a raft of reforms in legal system and property rights, in which it scored only 4.33. Likewise, the country scored 6.42 in access to money, freedom to trade internationally (6.47), and regulation of credit, labour and business (6.41) and size of government (8.72). Compared to the previous reports, scores in each of
the measure showed improvement, though only marginally.
Unveiling the report, Finance Minister Ram Sharan Mahat said there has been significant paradigm shift in economic thinking towards economic freedom all over the world. Some of the measures that the country has initiated, like protection for private property, execution of rule of law are proven incentives to boost entrepreneurship in the country, which in turn helped to improve Nepal’s ranking in the economic freedom index, as per Mahat.
Citing the research in top peer-reviewed journals, the report has said that people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and live longer. Countries in the top quartile of economic freedom had an average per-capita GDP of $38,601 in 2013, compared with $6,986 for bottom quartile nations, as per the report.
Moreover, average income in 2013 of the poorest 10 per cent in the most economically free countries ($9,881) dwarfed the overall average income in the least free countries ($1,629).
Countries like Hong Kong, Singapore, New Zealand, Switzerland and United Arab Emirates are ranked top five among the nations having high economic freedom. Some of the authoritarian economies like Venezuela, Republic of Congo, Libya, Chad and Syria are listed in the bottom five. Economic powers like the United States, China and Japan ranked at 16th, 111th and 26th positions, respectively.
Among South Asian countries, Nepal has ranked in the third position after Bhutan (87) and Sri Lanka (105). Afghanistan and Maldives have been left out in the study. In terms of rest of the South Asian countries, southern neighbour India ranked at 114th position, Bangladesh at 115 and Pakistan at 124.
Meanwhile, Samriddhi also unveiled the Country Audit Report examining specific areas of economic policies to understand how they contribute to the current state of
economic freedom in Nepal and has come up with recommendations for a series of reforms.