Nepal Falls In Economic Freedom Ranking

Nepal has fallen far behind than other Asian economies in terms of economic freedom, a latest global report revealed. According to the Index of Economic Freedom 2014, jointly published by the Heritage Foundation and The Wall Street Journal, Nepal ranked 149th among 178 countries globally. With a score of 50.1points out of 100, Nepal was placed among the group of countries having low level of economic freedom. The index puts economies with score at the range of 50-59.9 in the ‘Mostly Unfree’ group.  Similarly, the country ranked 34th among 42 nations in the Asia-Pacific region. “Nepal’s score has decreased by 0.3 points with modest improvements in business freedom, monetary freedom, and the control of government spending outweighed by declines in investment freedom and freedom from corruption…its score remains far below world and regional averages” informed the report. According to the report, this year’s world average for economic freedom is 60.3 while the regional average is 58.3 (Asia-Pacific) and average of the free economies is 84.1. In 2012 and 2013, Nepal ranked 147th and 141st in the index. The Index of Economic Freedom rates countries in 10 categories of economic performance such as rule of law, regulatory efficiency, limited government and open markets. 

 

Nepal was first graded in the 1996 Index, and its economic freedom score since then has been largely stagnant, declining overall by less than half a point. “Improvements in four of the 10 economic freedoms, including freedom from corruption, business freedom, monetary freedom, and trade freedom, have been more than offset by deterioration in other areas, particularly a 25-point decrease in investment freedom,” the report said.  Considered as a “mostly unfree” economy throughout its history in the Index, Nepal achieved its highest score in 2007. The report cited statist approach to economic management and development as a serious drag on business activity in Nepal. Likewise, it further mentioned that lack of transparency, corruption, and burdensome approval process impedes much-needed private investment and production in the country.

 

“Property rights are undermined by the inefficient judicial system, which is subject to substantial corruption and political influence,” it said. 

 

In the South Asia region (excluding Afghanistan), Nepal ranked lowest in the index. Regional giant, India ranked 120th. Sri Lanka was placed at 90th position followed by Bhutan (116th), Pakistan (126th), Bangladesh (131st) and Maldives (145th). Sri Lanka was the only South Asian country to achieve position in the group of ‘moderately free’ economy. China, the world’s second largest and Asia’s biggest economy, ranked 139th.

 

Hong Kong and Singapore finished first and second in the rankings for the 20th straight year followed by Australia, Switzerland, New Zealand, Canada, Chile, Mauritius, Ireland and Denmark. The world’s largest economy United States, ranked 12th in the index. North Korea, Cuba, Zimbabwe, Venezuela, Eritrea, Iran and Republic of Congo were the most unfree or repressed in terms of economic freedom. Among the 178 countries ranked, scores improved for 114 countries and declined for 59.