Ireland ranks fifth in world's liberal economies

LIBERAL economics, where taxation is low and government interference minimal, form a recipe for strong economic growth, a survey reveals.

In the 2004 Index of Economic Freedom, Ireland is ranked as the fifth most liberal economy in the world after Hong Kong, Singapore, New Zealand and Luxembourg.

Ireland is followed by Estonia, Britain, Denmark, Switzerland while the United States of America is ranked 10th in the survey.

The index is the work of The Heritage Foundation and The Wall Street Journal.

In its 10th year the research shows that countries enjoying the greatest economic freedom were also the most prosperous.

In the survey the index measures across 10 categories including the economy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation and informal (grey) market activity.

Those scoring best have been shown to have the higher standards of living and higher per capital incomes according to the researchers.

The latest data claims countries start to see benefits flow once they start the process of supporting and rewarding free enterprise.

The editors of the index say the implications are quite clear: “The message that governments should take from the new index is that they can help themselves by starting to adopt economic freedom.”

Increasing evidence underpins the fact that economies which adopt an unrestricted approach to doing business and who minimise government involvement do best.

The Index reveals an increasing shift towards more open trade.

Of the 155 countries analysed 75 scored better this year than they did in 2003 while 11 of the countries had unchanged ratings.

The scores of 69 countries were worse than last year too as some economies failed to keep up.

North America and Europe are now home to seven of the world’s most liberal economies, it emerged.

In the case of Ireland, the authors of the Index noted its 12.5% corporate tax. That beats the European average of 30% “and makes the Celtic Tiger a major draw for US investment”, said the authors.