Experts analyzing the recent Economic Freedom Index report by the Fraser Institute, a Canadian conservative think tank, note that Brunei has performed exceptionally well in terms of regulation, securing a score of 8.8 out of 10 and ranking second globally. Under the regulations category, Brunei scored 8.8 and secured the fourth position globally in labor market regulation and eighth place in business regulation with a score of 8.2. This ranking is based on 2020 data, the most recently available, and it indicates a high level of economic freedom in the Sultanate.
The Economic Freedom Index evaluates the individual financial decision ability and economic freedom of 165 economies globally, considering factors such as the size of the government, government spending, taxation, regulations, and international trade freedom. According to the report, Brunei ranked 59th out of 165 economies globally, but its overall economic freedom index was not as strong, dropping seven places compared to the 2019 index. This decline was largely due to lower scores for freedom to trade internationally.
Regional Comparison and Global Rankings
In comparison to its South-East Asian neighbors, Brunei’s ranking is surpassed by Singapore, which holds the second spot globally, while Malaysia ranks 49th, Cambodia 63rd, the Philippines 66th, Thailand 86th, Vietnam 113th, and Myanmar 137th. The global rankings are led by Hong Kong, followed by Singapore, Denmark, Switzerland, New Zealand, the United States, Australia, Mauritius, Estonia, and Ireland. Other notable countries include China, ranked 116th, Brazil 114th, Russia 94th, India 90th, Mexico 65th, France 54th, Italy 43rd, Germany 24th, and Japan 12th.
The report highlights the significance of economic freedom, with countries in the top quartile having lower levels of extreme poverty, at 2.02 percent, compared to 31.45 percent in the lowest quartile. Additionally, life expectancy is higher in the top quartile, at 80.4 years, compared to 66.0 years in the low quartile. As noted by McMahon, “Where people are free to pursue their own opportunities and make their own choices, they lead more prosperous, happier, and healthier lives.”
Economic Freedom and Global Trends
The COVID-19 pandemic has had a significant impact on global economic freedom, with 146 countries experiencing a decline in economic freedom due to the restrictions imposed by governments worldwide. The report emphasizes the importance of sound money, legal system, and property rights, all of which Brunei has maintained or improved upon compared to 2019. The Sultanate’s high ranking in regulation and labor market regulation is a notable aspect of its economic profile.
The relationship between economic freedom and prosperity is a key theme in the report, with countries having high levels of economic freedom tend to have lower levels of poverty and higher life expectancy. As the global economy continues to evolve, it is essential to monitor the trends in economic freedom and their impact on the well-being of individuals and societies.
Looking Ahead
As the world moves forward from the COVID-19 pandemic, it will be crucial to observe how countries adapt and respond to the challenges and opportunities presented by the changing global economic landscape. The next Economic Freedom Index report will likely provide valuable insights into the trajectory of economic freedom globally, and how countries like Brunei are positioned to navigate the complexities of the international economy. With its strong performance in regulation and labor market regulation, Brunei is well-placed to capitalize on its economic strengths and continue to improve its overall economic freedom, making it an important country to watch in the coming years.
