Cyprus and Bulgaria top 2021 Economic Freedom Index; Greece worst-ranked among Balkan, European countries

Cyprus and Bulgaria top 2021 Economic Freedom Index; Greece worst-ranked among Balkan, European countries

The American Heritage Foundation has published the 2021 Economic Freedom Index ranking countries by the prosperity of their economies. The evaluation takes into account various parameters, such as the efficiency of justice, government integrity, tax burden, investment freedom, and so forth.

According to the rankings of countries on IBNA’s radar, Cyprus, in 33rd place and Bulgaria, in 35th place, were categorized at the cluster of mostly free economies.

They are followed by countries classified with moderate economic freedom, with Greece having the worst ranking among Balkan countries, just one spot before the mainly unfree cluster

Cyprus

Cyprus’s economic freedom score is 71.4, making its economy the 33rd freest in the 2021 Index. Its overall score has increased by 1.3 points, primarily because of improvements in judicial effectiveness and government integrity. Cyprus is ranked 19th among 45 countries in the Europe region, and its overall score is above the regional and world averages.

This year, economic freedom in Cyprus advanced a bit higher in the mostly free category, which the country regained in 2020 for the first time since 2012. Perennial problems with judicial effectiveness and government spending have held back the Cypriot economy. Additional reforms are needed to improve the speed and efficiency of the judicial system.

Bulgaria

Bulgaria’s economic freedom score is 70.4, making its economy the 35th freest in the 2021 Index. Its overall score has increased by 0.2 point, primarily because of an improvement in the tax burden score. Bulgaria is ranked 20th among 45 countries in the Europe region, and its overall score is above the regional and world averages.

Bulgaria made it over the threshold into the ranks of the mostly free in 2020 for the first time since 1995. This year, it is barely clinging to that status. For the Bulgarian economy to move higher in the mostly free category, the government will have to implement reforms that address the additional deficiencies that are reflected in the country’s still-low scores for judicial effectiveness and government integrity.

Romania

Romania’s economic freedom score is 69.5, making its economy the 43rd freest in the 2021 Index. Its overall score has decreased by 0.2 point, primarily because of a decline in fiscal health. Romania is ranked 26th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

Although the Romanian economy had been rising through the ranks of the moderately free for more than a decade, it fell back a bit this year. To get back on track, the government will have to focus on improving the judicial system, strengthening anticorruption efforts, removing rigidities in the labor market, and further modernizing the financial sector.

North Macedonia

North Macedonia’s economic freedom score is 68.6, making its economy the 46th freest in the 2021 Index. Its overall score has decreased by 0.9 point, primarily because of a decline in trade freedom. North Macedonia is ranked 27th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

North Macedonia’s ranking fell within the moderately free category this year. To reverse course toward greater economic freedom, the first priority for the government should be to reform the judiciary, the costly and bloated public sector, and other state institutions. Achievement of another goal, promotion of foreign direct investment in export-oriented industries, would be encouraged by stronger enforcement of anticorruption statutes.

Slovenia

Slovenia’s economic freedom score is 68.3, making its economy the 48th freest in the 2021 Index. Its overall score has increased by 0.5 point, primarily because of an improvement in judicial effectiveness. Slovenia is ranked 28th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The Slovenian economy remains in the moderately free category for the fourth year in a row. To move higher in the economic freedom ranks, the government will need to take actions to improve such Index indicators as financial freedom and judicial effectiveness. There is a particular need to address high taxation and heavy spending policies that dampen private-sector investment and entrepreneurship.

Serbia

Serbia’s economic freedom score is 67.2, making its economy the 54th freest in the 2021 Index. Its overall score has increased by 1.2 points, primarily because of an improvement in the tax burden score. Serbia is ranked 30th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

Serbia’s economy maintained its upward trajectory in the moderately free category this year. To increase that positive momentum toward greater economic freedom, the government should continue to improve the business and investment climates by strengthening the rule of law, especially by reforming the judicial system and directing more resources to the Anti-Corruption Agency.

Kosovo

Kosovo’s economic freedom score is 66.5, making its economy the 58th freest in the 2021 Index. Its overall score has decreased by 0.9 point, primarily because of a decline in property rights. Kosovo is ranked 32nd among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

Kosovo’s economy has been in the ranks of the moderately free since the beginning of its Index grading in 2016. Economic freedom is stymied by political instability, corruption, an unreliable energy supply, a large informal economy, unresolved property disputes, and a tenuous rule of law that is reflected in low Index scores for property rights, judicial effectiveness, and government integrity.

Albania

Albania’s economic freedom score is 65.2, making its economy the 66th freest in the 2021 Index. Its overall score has decreased by 1.7 points, primarily because of declines in property rights and judicial effectiveness. Albania is ranked 35th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

Albania’s economic freedom reached a high-water mark in 2020 but has declined this year, stalling progress in catching up to the European average. However, the government has managed to maintain control of the budget deficit and public debt. To advance its candidacy for EU accession, Albania needs to strengthen rule-of-law institutions and improve its scores for property rights, judicial effectiveness, and government integrity.

Turkey

Turkey’s economic freedom score is 64.0, making its economy the 76th freest in the 2021 Index. Its overall score has decreased by 0.4 point, primarily because of a decline in fiscal health. Turkey is ranked 37th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The Turkish economy remains moderately free this year. Any advancement will require broad reform to improve the transparency and efficiency of the regulatory system. More urgently, the government needs to strengthen judicial effectiveness and the fight against corruption, both of which remain damaged in the aftermath of the purging of the judicial system that followed the attempted coup in 2016.

Croatia

Croatia’s economic freedom score is 63.6, making its economy the 79th freest in the 2021 Index. Its overall score has increased by 1.4 points, primarily because of an improvement in the tax burden score. Croatia is ranked 38th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

Again in 2021, Croatia’s economy moved a little higher in the moderately free category and set a new record high for its economic freedom. For further progress, the government needs to accelerate implementation of its long-delayed structural reform package so that it can sell off burdensome state companies and reduce government spending. Further improvements are also needed in the judicial system and labor laws.

Montenegro

Montenegro’s economic freedom score is 63.4, making its economy the 80th freest in the 2021 Index. Its overall score has increased by 1.9 points, primarily because of an improvement in fiscal health. Montenegro is ranked 39th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The economy of Montenegro climbed in the ranks of the moderately free this year. High government spending and debt levels, which hamper the realization of greater economic freedom, would be alleviated by improved public-sector finance. The country also remains beset by corruption and weak rule of law, as well as by a complex and time-consuming regulatory environment.

Bosnia Herzegovina

Bosnia and Herzegovina’s economic freedom score is 62.9, making its economy the 82nd freest in the 2021 Index. Its overall score has increased by 0.3 point, primarily because of an improvement in the tax burden score. Bosnia and Herzegovina is ranked 40th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

Bosnia and Herzegovina’s economy remains moderately free for the fifth year in a row. The main impediment to greater economic freedom remains very poor performance on the rule-of-law indicators: property rights, judicial effectiveness, and government integrity. Adoption of policies to improve business freedom is likewise necessary but will require better cooperation between the country’s separate political entities.

Greece

Greece’s economic freedom score is 60.9, making its economy the 96th freest in the 2021 Index. Its overall score has increased by 1.0 point, primarily because of an improvement in judicial effectiveness. Greece is ranked 44th among 45 countries in the Europe region, and its overall score is below the regional and world averages.

Greece’s economy has returned to the ranks of the moderately free for the first time in a decade. To build on this progress toward greater economic freedom, however, the government will have to reduce spending, strengthen rule-of-law institutions, combat public and private corruption effectively, and improve financial freedom and investment freedom. /ibna