Hong Kong and Venezuela (Graphics not availalbe)
Hong Kong has built economic strength from an impoverished economic infrastructure, since the 1950's, at the same time as Venezuela's economic health has declined despite its relatively strong economic structure. Figure 1 shows that in 1950, Hong Kong's income per person was approximately half of Venezuela. During that period, Hong Kong came under tremendous economic and social pressure due to an arrival of immigrants from China and a lack of natural resources to support growth. In the interim, Venezuela was resource-rich and had a relatively stable population. Comparisons in the 1990s showed Venezuela's income per person was much lower ...view middle of the document...
What Fermi emphasizes is that when we make a comparison, we make measurements. While the concept of economic freedom remains difficult to measure, continued efforts are made to accurately gauge comparisons by refining measurement methodology. http://www.federalreserve.gov/fomc/
Measuring economic freedom consists of three main elements:
The right to engage in voluntary acts of trade and exchange, without interference by government or others via force or fraud;
The ability to access an impartial judiciary or the enforcement of property rights;
The right of citizens to retain a majority of the income they earn.
An Economic Freedom Index has been designed to identify various factors that make a country economically free, by using a compendium of 23 freedom factors based on objective data or independent surveys. It is a ranking of 123 countries according to the extent to which they are free. http://www.hku.hk/hkcer/articles/v57/walker
The Economic Freedom Index's components consist of:
Economic structure - extent of government ownership over the means of production
Monetary and price stability
Freedom to use alternative currencies - the right to use foreign currencies to engage in foreign trade.
Legal structure and property rights - enforceability of contracts and security of property rights.
International exchange - the extent to which citizens can trade with foreigners.
Freedom of exchange in capital markets - the right to engage in capital transactions with foreigners, the right to have access to credit facilities.
Taking into consideration all aspects of the Economic Freedom Index, Hong Kong and Singapore emerge as the "Most Free Countries" while New Zealand is ranked the third most open economy amongst the 123 countries in 1999. Hong Kong has enjoyed high levels of economic freedom since the 1970's. During the past few decades, Hong Kong has continued to be the top ranked jurisdiction in the world. Although Hong Kong's overall economic freedom rating in 1999 was up since 1990, it was still down from a peak score of 9.8 (out of a possible score of 10) in 1995. This slip can be attributed to a decline in the Legal Structure and Property Rights Index section2. However, in other areas of the index, Hong Kong consistently maintained or improved its scores since 1995. Since 1997, its rating has been tied with Singapore, due to the lagged effect of concern on contract repudiation when Hong Kong became the Special Administrative Region. Since contracts entered by the Hong Kong government did not have the complete involvement of the People's Republic of China prior to 1997, there was initial concern that after Hong Kong's handover to China, some contracts (including one for Hong Kong's airport) would not be honored. The passing of this uncertainty means future ratings should see Hong Kong achieve higher scores in the Index's Viability of Contracts...