ZIMBABWE has been ranked as the country with the worst economic freedom out of the 141 countries surveyed, according to Economic Freedom of the World: 2008 Annual Report, released on Tuesday by the Free Market Foundation (FMF).
The report, produced by Canada’s Fraser Institute, with local input provided by the FMF, measures economic freedom by considering aspects such as size of government, the legal system, access to “sound” money that is not eroded by inflation or hindered by foreign exchange controls, freedom to trade internationally, and regulation of credit, labour and business.
According to the report, Zimbabwe has been performing badly in the five areas compared to the other 141 countries surveyed.
“Zimbabwe has been found wanting in all measures used in the survey and was ranked at the bottom,” said the report.
The report ranks Hong Kong number one, followed by Singapore and New Zealand. Angola and Burma are second and third from bottom.
“The single most important factor in economic growth is the legal system. The laws of economics say to governments, ‘You can really mess up on a lot of things and we’ll forgive you provided you have a good legal system’,” said FMF executive director Leon Louw.
Zimbabwe’s investment rating has remained dismal with the latest World Bank report indicating it was still one of the worst countries to do business in . The World Bank ranked Zimbabwe 168 out of 181 on the ease of doing business index, highlighting deterioration in the country’s unstable economic environment.
The stiffest challenge for any government that emerges from the power-sharing deal itself a “product of painful compromises”, is to ensure that the country’s “economic freedom and doing business ratings” improve after it’s economy shrunk by 60% in a decade.
Article three of the power-sharing deal signed in Zimbabwe on Monday says the parties agreed “to give priority to the restoration of economic stability and growth in Zimbabwe”.
The agreement said the new government would lead the process of developing and implementing an economic recovery strategy and plan.
“To that end the parties are committed to working together on a full and comprehensive economic programme to resuscitate Zimbabwe’s economy, which will urgently address the issues of production, food security, poverty and unemployment and the challenges of high inflation, interest rates and exchange rates,” the agreement said.
“The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete, and security of private property,” said the report.
The report, said research has shown that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity, greater individual freedoms and longer life spans.
This year’s report also contains new research showing the effects of economic freedom on poverty reduction.
By Paul Nyakazeya