10/02/2014

_ James Roberts: “When economic freedom increases, global economy grows and poverty decreases”

_ Miguel Marín: “The reform process should take us back where we belong, competing with the world’s great nations”

_ Global economic freedom has recorded its highest score in the Index’s 20-year history

Jaime García-Legaz, Secretary of State for Trade, stated today at the 2014 Index of Economic Freedom launch that “Spain has still a very important reform agenda ahead”. In this respect, he stated that “the national reform program will include new measures” and that “the Index constitutes an incentive for Spain to become increasingly free from an economic point of view”. James Roberts, researcher at The Heritage Foundation, and Miguel Marín, Director of FAES Economy and Public Policies Department, also took part in the launch, organised by FAES Foundation.

This document is annually produced by The Heritage Foundation and The Wall Street Journal. This year’s edition, which analyses 178 global economies, shows global economic freedom once again on the rise, recording its highest score in the Index’s 20-year history. “Results provide strong evidence of the free-market system’s success in promoting prosperity and human development”, the Index states.

During his intervention, García-Legaz stated that “Spain needs to make an additional effort in budgetary consolidation and public expenditure reduction but, mainly because of the current distribution and the level of expenditure, it is the Autonomous Communities which have a longer way ahead than the State Administration or local administrative bodies”. In this respect, he stated that the recent reform proposal for Public Administrations aims to “structurally reduce public expenditure and to achieve a smaller, more effective and more efficient Administration”.

Lastly, García-Legaz warned about the two-year time lag imposed by the methodology used when calculating the Index, since this 2014 edition shows reality up to June 2012. What has happened in Spain since then will be shown by the Index from next year onwards.

MORE FREEDOM, MORE GROWTH

The Index has shown that when economic freedom increases, global economy grows and poverty decreases, explained James Roberts, researcher at The Heritage Foundation’s Center for International Trade and Economics. For that reason, he encouraged to promote it, “because it leads to higher growth, and it is translated into higher performance” at several levels. Countries with higher levels of economic freedom, he explained, substantially outperform others in aspects such as economic growth, per-capita incomes, health care, education, protection of the environment, reduction of poverty and general welfare.

CONSOLIDATING THE PROGRESS ACHIEVED

Miguel Marín, Director of FAES Economy and Public Policies Department also appreciated “a direct correlation between economic freedom and prosperity”, and stated that “economic freedom is not an abstract concept, let alone unrealistic”. “It takes a big effort to consolidate the progress which creates a freer environment, and a small one to revoke it,” Marín warned, who recalled that, in Spain, “much of the progress achieved from 1996 to 2004 was demagogically revoked by the Socialist Government”. “Our economy’s disappointing response to the crisis is partly explained by the backwards steps taken which generated a less flexible economy, less adapted to the global environment”, he highlighted.

Marín claimed that “the history of reform in Spain has always been a history of success. Every time we have aimed for greater openness, the outcome has been positive”. For that reason, he claimed, “we need to bear this conviction in mind now that we have started a reform process which ought to be able to take us back where we belong, which is none other than competing with the world’s great nations”.

RESTORED MOMENTUM

The Economic Freedom Index is published annually in order to measure the level of freedom in global economies. The study measures economic freedom based on ten factors, grouped into four categories: Rule of Law, size of the government, regulatory efficiency and open markets. Hong Kong, Singapore and Australia lead this edition’s ranking.

The average score of the countries analysed is 60.3, the highest average in the 20-year history of the Index. The average is 0.7 point higher than last year and there is a 2.7 point improvement from 1995. The Index shows that this global progress is “specially good” news, because “much of the momentum lost during the past five years has been regained” and “has been driven by developing and emerging economies”.

According to the Index, Spain holds the 49th position in the global ranking with a 67.2 score, which means that, over the past 20 years, Spain has improved its economic freedom score by 4.4 points. Nonetheless, its score is 0.8 point lower than last year. Even though the economic factors analysed show a moderate improvement, Spain continues to score below the world average in fiscal freedom, public expenditure and labour freedom.