Heritage Foundation recently published its 25th edition of the Index of Economic Freedom, which assesses economic freedom in a total of 186 countries for the year 2019. In detail, the overall index score is calculated based on twelve freedom-related criteria classified under four major categories, and each criterion is graded on a scale of 0 (worst) to 100 (best). The scores of these twelve components of economic freedom, which are calculated based on a number of sub-variables, are equally weighted and averaged to produce an overall economic freedom score for each economy. In this vein, Heritage Foundation found out that economic freedom has marginally deteriorated across the world after six consecutive years of improvement, with the global average economic freedom score for 2019 dropping by 0.3 points to 60.8, down from 61.1 in 2018, yet remaining at its third highest level since the index’s inception. Concurrently, 6 countries emerged as “free” (scores above 80), 29 countries as “mostly free” (scores between 70 and 80), 59 countries as “moderately free” (scores between 60 and 70), 64 as “mostly unfree” (scores between 50 and 60), and 22 as “repressed” economies (scores below 50). More particularly, Honk Kong topped the list of covered countries in the 2019 Index of Economic Freedom (IEF) for yet another year in a row with an overall score of 90.2, followed by Singapore (score: 89.4) and New Zealand (score: 84.4). On a regional basis, the United Arab Emirates (UAE) led the list of countries in the Middle East and North Africa (MENA) region in the 2019 IEF, scoring 77.6 and ranking 9th worldwide. The UAE was followed by Qatar (score: 72.6; global rank: 28) and Jordan (score: 66.5; global rank: 53), only to name a few.
Locally, Lebanon scored an all-time low of 51.1 in the 2019 IEF, compared to a score of 53.2 in 2018, losing as such 14 positions to rank as the 154th freest economy in the world, yet preserving the 11th place among its regional peers. Lebanon was only followed by Iran (score: 51.1; global rank: 155) and Algeria (score: 46.2; global rank: 171) in the MENA region. According to the report, Lebanon only saw its labor freedom improve, which was largely offset by weakening scores in the areas of rule of law, trade and investment freedom, business and monetary freedom, government spending, and tax burden. In the same context, the report unveiled that policy implementation in Lebanon was constrained by the prevailing local political deadlock throughout the year 2018, yet praised the country’s “free-market tradition and strong history of private commercial activity”. The report also stated that despite the aforementioned deadlock, various critical laws have been passed, namely those in relation to the oil and gas field and to public-private partnerships (PPPs), which should encourage foreign investments and address the country’s ailing infrastructure. The report cited, however, the country’s twin deficits as major challenges to its economic performance. As far as the IEF’s major categories are concerned, and under the “rule of law” pillar, the report recognized the effective enforceability of real private property protection laws in Lebanon, unlike intellectual property protection laws, the respect of which remains flawed. The report further underlined the persistent corruption staining government contracts, taxation, and real estate registrations, only to name a few. On the “government size” front, the report estimated the country’s total government spending at 28.5% of GDP and its budget deficit at 8.0% of GDP on average during the past three years, while pinpointing a 152.8% debt-to-GDP ratio. In the area of “regulatory efficiency”, the report noted that obstacles to business freedom in Lebanon include overregulation, stringent licensing requirements, outdated laws, and high fees. On the “open markets” front, the report considered that the prevailing political tensions, coupled with the relatively weak regulatory environment, have hindered trade and investment activities in the country. From another standpoint, the report mentioned that nearly half of the Lebanese adult population enjoys an access to a bank account.