REPORT | 2021 Index of Economic Freedom
Heritage Foundation | December 27, 2021
About The Index
For much of human history, most individuals have lacked economic freedom and opportunity, condemning them to poverty and deprivation.
Today, we live in the most prosperous time in human history. Poverty, sicknesses, and ignorance are receding throughout the world, due in large part to the advance of economic freedom. In 2021, the principles of economic freedom that have fueled this monumental progress are once again measured in the Index of Economic Freedom, an annual guide published by The Heritage Foundation, Washington’s No. 1 think tank.
For twenty-seven years the Index has delivered thoughtful analysis in a clear, friendly, and straight-forward format. With new resources for users and a website tailored for research and education, the Index of Economic Freedom is poised to help readers track over two decades of the advancement in economic freedom, prosperity, and opportunity and promote these ideas in their homes, schools, and communities.
The Index covers 12 freedoms – from property rights to financial freedom – in 184 countries.
The 2021 Index — the 27th edition—includes:
- Updated economic freedom scores and macroeconomic data for 184 economies.
- Easy-to-read cross-country comparisons that highlight why economic freedom matters.
- Online tools like customized comparison charts and an interactive heat map.
Frequently Asked Questions
Q.1. What is economic freedom?
Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.
Q.2. What are the benefits of economic freedom?
Economic freedom brings greater prosperity. The Index of Economic Freedom documents the positive relationship between economic freedom and a variety of positive social and economic goals. The ideals of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development, democracy, and poverty elimination. For further information, see especially:
- Chapter 1: Key Findings of the 2021 Index
- Chapter 2: 12 Economic Freedoms: Policies for Lasting Progress and Prosperity
- Chapter 3: Economic Freedom Around the World: The Key to Human Progress
- Regional Variations
Q.3. How do you measure economic freedom?
We measure economic freedom based on 12 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom:
- Rule of Law (property rights, government integrity, judicial effectiveness)
- Government Size (government spending, tax burden, fiscal health)
- Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
- Open Markets (trade freedom, investment freedom, financial freedom)
Each of the twelve economic freedoms within these categories is graded on a scale of 0 to 100. A country’s overall score is derived by averaging these twelve economic freedoms, with equal weight being given to each. More information on the grading and methodology can be found in the appendix.
Q.4. Which components of economic freedom are most important?
The Index of Economic Freedom considers every component equally important in achieving the positive benefits of economic freedom. Each freedom is weighted equally in determining country scores. Countries considering economic reforms may find significant opportunities for improving economic performance in those factors in which they score the lowest. These factors may indicate significant binding constraints on economic growth and prosperity.
Q.5. What is your period of study?
For the 2021 Index , most data covers the second half of 2019 through the first half of 2020. To the extent possible, the information considered for each factor was current as of June 30, 2020. It is important to understand that some factors are based on historical information. For example, the monetary policy factor is a 3-year weighted average rate of inflation from January 1, 2017, to December 31, 2019.
Q.6. Can I access the data online?
The Index of Economic Freedom can be easily explored using a variety of tools on our interactive website, including:
- Country Rankings: See where your country ranks in the Index and compared to its peers, and keep up with political and economic developments on each country’s page.
- Graph the Data: Customize and compare country scores in up to three countries using interactive graphics.
- Explore the Data: Download over 20 years of historical Index data, including macroeconomic indicators, and a regional breakdown of Index scores since 1995.
- Heat Map: Visualize the 2021 Index of Economic Freedom in this stunning and interactive map of the world. Find out how competitive your region is in achieving the ideals of economic freedom.
- Downloads: Download the entire Index of Economic Freedom book, or pick individual chapters, the methodology, or regional maps.
Q.7. How can I use the Index of Economic Freedom?
The Index of Economic Freedom is a helpful tool for a variety of audiences, including academics, policymakers, journalists, students, teachers, and those in business and finance. The Index is an excellent objective tool for analyzing 184 economies throughout the world and each country page is a resource for in-depth analysis of a country’s political and economic developments. The 12 economic freedoms and accompanying historical data also provide a comprehensive set of principles and facts for those who wish to understand the fundamentals of economic growth and prosperity.
To download the highlights, please click here.
To download the full report, please click here.