Philippines has 70th freest economy in the world — study

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Metro Manila (CNN Philippines) — Out of 178 economies, the Philippines is the 70th freest in the world, according to the latest Index of Economic Freedom by the Heritage Foundation.

The Washington-based think tank analyzes developments in economic freedom, prosperity, and opportunities in different economies across the world.

The Philippines scored a “moderately free” rating of 63.1 out of a possible 100, the highest it has received in the past five years.

The freest economy is Hong Kong, followed by Singapore, New Zealand, Switzerland, and Australia. Ranked last is North Korea, with a 2.3 “repressed” rating.

In Southeast Asia, only Malaysia has a “mostly free” economy. Thailand is “moderately free” while Cambodia and Vietnam are “mostly unfree.” Myanmar has a "repressed" economy.

What does it mean for the Philippines?

Countries that have the most economic freedom prosper more compared to those that have repressed economies. According to The Heritage Fund, people who belong to economically free societies can work, own, produce, consume, trade, and invest as they please.

The index measures economic freedom based on 10 components, grouped into four categories: Rule of Law (property rights, freedom from corruption), Limited Government (fiscal freedom, government spending), Regulatory Efficiency (business, labor, and monetary freedom), and Open Markets (trade, investment, and financial freedom).

An economy’s overall score is derived by averaging the score of each component, graded on a scale of 0 to 100.

The Philippine economy has been growing at 6 percent annually, characterized by steady job growth in the private sector and booming industries such as agriculture, electronics, apparel, and shipbuilding, the think tank said.

It pointed out that the economy has done well in terms of monetary freedom and public finance management, and that poor infrastructure is considered an impediment to progress.

However, its top concerns were Labor Freedom, which falls under Regulatory Efficiency, and Rule of Law.

"Corruption and cronyism are rife in business and government. A few dozen leading families hold a disproportionate share of land, corporate wealth, and political power. A culture of impunity, stemming in part from case backlogs in the judicial system, hampers the fight against corruption. The rule of law is generally weak as courts are hampered by inefficiency, low pay, intimidation, and corruption."

"The labor market remains structurally rigid, although existing regulations are not particularly burdensome," it added.

The report suggested that the Philippines would achieve more economic freedom if stronger anti-corruption measures were institutionalized.