Hong Kong and Singapore were ranked the world's freest economies, but they face a growing challenge from a group of European countries that are aggressively liberalizing, according to a survey released yesterday by the Heritage Foundation and the Wall Street Journal.
The two Asian port cities have taken the first and second spots for 12 straight years in the Index of Economic Freedom.
Both were rated as having improved further last year, thanks to reduced government spending in Hong Kong and a cut in tax rates in Singapore, the survey said.
"Hong Kong has the best score it's ever had, and the gap between Hong Kong and Singapore remains fairly substantial," said Edwin Feulner, president of Heritage Foundation, a conservative think tank based in Washington.
The index's rankings for the 157 nations in the survey are based on factors including openness to trade and foreign investment, the size of government and its involvement in the economy, regulation of wages and prices and protection of property rights.
Feulner said the gap between No. 2 Singapore and No. 3 Ireland was quite narrow, and Luxembourg, Iceland, the UK, Estonia and Denmark were close behind in the top 10.
Hong Kong's grip on the top spot looks secure unless its government makes major policy shifts, he said.
China and India, two of the world's fastest-growing economies, are ranked quite low: 111th and 121st respectively out of the 157 countries.
High taxes, barriers to foreign investment and a strong government presence in the economy through state-owned enterprises kept both countries from being given high ratings of economic freedom, the foundation said.
Myanmar, Iran and North Korea were ranked as the least-free economies.