USA is worlds fifth freest economy

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Asia is home to the world's freest - and most repressed - economies, but Europe ranked highest as a region in terms of economic freedom, an annual report released Tuesday by the Heritage Foundation and Wall Street Journal said.

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Hong Kong and Singapore retained their No. 1 and No. 2 rankings respectively on the annual Index of Economic Freedom for the 14th successive year. Both port cities benefit from low taxes and liberalized trade. Hong Kong, however, saw its score dip slightly due to higher inflation and greater tax revenues.

European countries accounted for half of the top 20 economies considered free or mostly free, with Ireland at No. 3, Switzerland at No. 9 and Britain at No. 10. The U.S. ranked No. 5, and Canada ranked 6th.

Moves by newer members of the European Union to introduce straightforward tax policies to attract more investment were having a radical impact on the region as a whole, the authors said.

"What we are seeing is a very strong commitment to economic freedom in the new EU countries, and this is having a positive impact on policies in the some of the older European countries ... such as France," said Edwin Feulner, president of the Heritage Foundation, a Washington-based think tank. "I think we will continue to see this evolve over time and we expect to see gradual improvement in economic freedom throughout Europe as a whole."

While Europe was moving more greater economic liberalization, the prevailing sentiment in the United States was protectionism, said Mary Kissel, the editorial page editor of the Wall Street Journal's Asian edition.

"We have Democratic candidates coming out against free trade agreement and for higher taxes," she told reporters. "On the Republican side too, there's talk of protecting American jobs. Meanwhile, you have a Congress which is considering a clutch of bills aimed at punishing China for exporting too much to American consumers."

The index, which grades 157 economies on 10 economic factors, including property rights, regulation of wages and prices and trade barriers, shows "a very high correlation" between a liberalized economy and a country's prosperity, Feulner said.

"The average per-capita of free countries is more than seven times that of the repressed and un-free economies," he said.

The most liberalized economies on the index average about $33,579 per capita gross domestic product while repressed countries average about $3,813.

North Korea again ranked lowest on the list, below Zimbabwe and Cuba.

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