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Vanuatu beats other Pacific island countries in 2018 Economic Freedom Index

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Heritage Foundation, one of the most influential American think tanks, has recently released its 2018 Global Economic Freedom Index, which places Vanuatu on the relatively high 36th place in the world among the 180 countries ranked.

Vanuatu ended up at the top of “moderately free” group of countries, higher than Romania, Uruguay, Poland, Cyprus, Philippines, Tonga and Fiji.

Vanuatu’s economic freedom score is 69.5, making its economy the 36th freest in the 2018 Index. Its overall score has increased by 2.1 points, with significant improvements in judicial effectiveness and government integrity outpacing lower scores for the government spending and fiscal health indicators. Vanuatu is ranked 10th among 43 countries in the Asia–Pacific region, and its overall score is above the regional and world averages.



Vanuatu – higher rank that expected, with still a long way to go


American think tank’s experts included quite a lot of criticism in Vanuatu’s review, explaining why country’s rank is lower than it could be.

“Economic development in Vanuatu is hindered by dependence on relatively few commodity exports, vulnerability to natural disasters, and long distances to major markets. Strong factionalism continues to undermine policymaking. There is an overall lack of commitment to institutional reforms. Property rights are poorly protected, and investment is deterred by the country’s inadequate physical and legal infrastructure. High tariffs and nontariff barriers to trade hold back integration into the global marketplace. Business activity is further limited by rigid labor regulations and widespread corruption,” Heritage Foundation reports.

“Property rights are not adequately protected, and there have been specific complaints about land registration procedures. The judiciary is largely independent but lacks the resources to retain qualified personnel. The law provides criminal penalties for official corruption, and the government generally implements the law effectively. Officials sometimes engage in corrupt practices with impunity.”


‘The government subsidizes numerous money-losing and poorly managed state-owned enterprises’


“Over the past three years, government spending has amounted to 26.8 percent of total output (GDP), and budget deficits have averaged 0.2 percent of GDP. Public debt is equivalent to 31.3 percent of GDP.”

“The government subsidizes numerous money-losing and poorly managed state-owned enterprises,” Heritage Foundation notes.

“Government openness to foreign investment is above average. The financial sector remains rudimentary. Access to credit and formal banking services remains low.”


Vanuatu beats Fiji, Samoa and other Pacific island nations in the rank

Vanuatu is also ahead of all the other Pacific islands countries in this rank. Tonga is 76th, Fiji – 84th and Samoa – 90th among “moderately free” economies, while Solomon Islands (114th), PNG (127th), and Micronesia (143d) are even lower and classified as “mostly unfree.”

New Zealand’s economic freedom score is 84.2, making its economy the 3rd in the 2018 index. Its overall score has increased by 0.5 point, with an improvement in government integrity outpacing a decline in the labor freedom indicator. New Zealand is ranked 3rd among 43 countries in the Asia–Pacific region, and its overall score is far above the regional and world averages, Heritage Foundation experts say.

Australian is on the 5th place in the world. Australia’s economic freedom score is 80.9, making its economy the 5th in the 2018 economic freedom index. Its overall score has decreased by 0.1 point, with higher scores for the government integrity and government spending indicators offset by declines in labor freedom and property rights. Australia is ranked 4th among 43 countries in the Asia–Pacific region, and its overall score is well above the regional and world averages.

The world average score of 61.1 is the highest recorded in the 24-year history of the Index. The world average is more than three points higher than that recorded in the first edition of the Index in 1995.
Among the 180 countries ranked, scores improved for 102 countries and declined for 75. Only three remained unchanged.

Six economies earned the Index’s designation of “free” (scores of 80 or above), while the next 90 are classified as “mostly free” (70-79.9) or “moderately free” (60-69.9).

“Thus, a total of 96 economies—more than half of all nations and territories graded in the 2018 Index—provide institutional environments in which individuals and private enterprises benefit from at least a moderate degree of economic freedom in the pursuit of greater economic development and prosperity,” the Index editors write.