– Singapore has achieved a significant milestone by surpassing Hong Kong to claim the title of the world’s freest economy. This revelation comes from a report by the Canadian think tank, Fraser Institute. This shift in ranking is monumental, as Hong Kong had held the top position since the inception of the Economic Freedom of the World Index in 1970. Now, for the first time, Hong Kong has been relegated to the second spot, with indications that its score might decline even more in the future.

The criteria used to determine the economic freedom index encompass various factors. These include the ease of international trade, the freedom for businesses to enter and compete in markets, and the prevailing business regulations, among other benchmarks. The 2023 report, which presented these findings, utilized data from 2021, offering a comparative analysis across 165 jurisdictions. The primary focus of this index is to measure the economic freedom of individuals, emphasizing their autonomy in making economic decisions.

Matthew Mitchell, a senior fellow at the Fraser Institute, highlighted the intricate relationship between economic freedom and civil and political freedom. He commented on Hong Kong’s recent trajectory, pointing out the introduction of new regulatory barriers, the escalating cost of doing business, and restrictions on hiring foreign labor. These factors have collectively impacted Hong Kong’s ranking. Mitchell further elaborated, “These repressions, combined with the government’s efforts to control the private sector, inevitably led to diminished economic freedom. Hong Kong’s prosperity will likely suffer as a result.”

In 2020, a significant development occurred when China introduced a national security law in Hong Kong. Many critics viewed this as a move that undermined the city’s autonomy. The new legislation stipulates severe penalties, with crimes like secession and sedition attracting sentences of up to life imprisonment.

On the other hand, Singapore’s ascent to the top was driven by enhancements in its governmental structure and regulatory components. The report noted that Singapore’s overall score witnessed an increase of 0.06 points, propelling it to the premier position. Following Singapore and Hong Kong, Switzerland, New Zealand, and the U.S. secured the third, fourth, and fifth spots respectively. Other countries that made notable appearances in the rankings include the United Kingdom in sixth place, with Japan and Germany securing the 20th and 23rd positions.

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