17/03/2020 - 21:10 8266

The Index of Economic Freedom is compiled by the Heritage Foundation research center in collaboration with The Wall Street Journal since 1995.

Index Methodology

• The Index of Economic Freedom is a combination of 12 components (property rights, judicial effectiveness, government integrity; tax burden, government spending, fiscal health; business freedom, labor freedom, monetary freedom; trade freedom, investment freedom, financial freedom), which are combined in 4 groups - the rule of law, the role of the state in the economy, regulatory effectiveness and market transparency.
• In the annual report of the index, 186 countries are evaluated using a 100-point system. The points obtained for each indicator have the same specific gravity; the total score is determined as the arithmetic average of 12 components.
• According to developers, the higher the index value, the more the state is economically free. According to the index, the level of economic freedom of states is divided into 5 categories:
  • The economy is completely free: 80-100 points;
  • The economy is mostly free: 70-79.9 points;
  • The economy is moderately free: 60-69.9 points;
  • The economy is mostly not free: 50-59.9 points;
  • The economy is completely unfree: 0-49.9 points. 
• The results of the components are based on open data published by government bodies and ratings of various international organizations (World Economic Forum, World Bank, International Monetary Fund, Credendo Group, Transparency International and others).
• The report “Index of Economic Freedom 2020” analyzed the database from July 1, 2018 to July 1, 2019.

High scores

• According to the report for 2020, top 10 results belong to the following countries: Singapore, Hong Kong, New Zealand, Australia, Switzerland, Ireland, United Kingdom, Denmark, Canada, Estonia.

 

The Republic of Uzbekistan

• Uzbekistan took 114th place in the world, having improved its rating by 26 positions.
• Uzbekistan scored 57.2 out of 100 points.
• Over the past 3 years, the rating has been improved by 38 positions (2018 – 152nd position).
• In the Asia-Pacific region, with an improvement in the rating value of + 3.9 points, along with Vanuatu (+4.3), Kazakhstan (+4.2), Vietnam (+3.5) and Maldives (+3.3) entered Top 5 countries in terms of rating growth.
• According to the latest report for 2020, Uzbekistan is part of the largest reformers (62 countries) in terms of the Freedom of Trade component.
• Among the countries of the Asia-Pacific region, Uzbekistan occupies 26th position (+10 positions from the previous report) out of 42 countries.

Bottom results

The Republic of the Congo, Eritrea, Cuba, Venezuela, and North Korea placed on the bottom line.

Improved Indicators

• Good indicators of Uzbekistan
• Fiscal policy (98.9 points, +0.2 growth) - based on the budget deficit over the past three years. Uzbekistan is one of the countries with the highest results.
• Tax burden (91.6 points, +0.3 growth) - includes the tax burden on business profits, personal income and the total burden (including direct and indirect taxes) in percentage of GDP. With the previous report, there is a decline of 0.9%. The new version of the Tax Code is aimed at further improvement of this component.
• Government spending (74.7 points, +7.3 growth) - are estimated based on the distribution of the budget, a decrease in spending by 4.0% of GDP is observed.
• Business freedom (72.6 points, +0.1 growth) - based on an analysis of the processes of starting, licensing, terminating a business, as well as connecting to an electricity supply system.
• Trade freedom (67.6 points, +5 growth) - is estimated by the average tariff and non-tariff barriers that affect the import and export of goods and services.

 

Priority areas for improvement

• Financial freedom (20 points, +10 growth) - is estimated by the level of government intervention in the distribution of loans, the level of development of the capital market and freedom of competition. This result indicates the need for reforms in this area.
• Investment freedom (20 points, +10 growth) - the index assesses various regulatory restrictions that are usually imposed on investments. The aforementioned low results indicate that reforms should be carried out with a thorough analysis of the sector.
• Government integrity (28.2 points, +3 growth) - the component analyzes the indicators of bribery, transparency of state policy, corruption and transparency of the activities of public servants. Despite the positive growth, the overall result implies the need for specific measures to improve results.
• Judicial effectiveness (34.2 points, -0.1 decrease) - calculated according to indicators of judicial independence, the effectiveness of legal proceedings, favoritism in decisions of the civil service and public trust in politicians.
• Property rights (59.1 points, +9.3 growth) - is based on property and intellectual property rights, the strength of investor protection, the risk of confiscation of property and the quality of land management.
• Labor freedom (59.9 points, +1.2 growth) - a measure that takes into account aspects of the regulatory framework of the country's labor market regarding the minimum wage; laws preventing layoffs; severance pay requirements and measurable regulatory restrictions on hiring and hours worked, as well as the level of labor force participation as an indicative indicator of job opportunities in the labor market
• Monetary freedom (59.9 points, +1 growth) - based on inflation over the past three years and price limits.

 

The results of the Republic of Uzbekistan in the index for 2019 and 2020
Indicator	2019	2020			Indicator	2019	2020
1. Property rights	49.8	59.1	(+9.3)		7.  Business Freedom	72.5	72.6	(+0.1)
2. Judicial Effectiveness	34.3	34.2	(-0.1)		8.  Labor Freedom	58.7	59.9	(+1.2)
3. Government Integrity	25.2	28.2	(+3.0)		9.  Monetary Freedom	58.9	59.9	(+1.0)
4. Tax Burden	91.3	91.6	(+0.3)		10.  Trade Freedom	62.6	67.6	(+5.0)
5. Government Spending	67.4	74.7	(+7.3)		11. Investment Freedom	10	20	(+10)
6. Fiscal Heath	98.7	98.9	(+0.2)		12. Financial Freedom	10	20	(+10)