How “Free” is Taiwan’s Economy? 2021.03.19

Economic freedom refers to the promotion of the development of goods and trade in order to pursue economic interests and to advance society’s wealth and prosperity while protecting the market’s freedom.

In the 2020 Index of Economic Freedom report published by The Heritage Foundation, a U.S. think tank, the economic freedom of 180 countries and regions across the world were evaluated and ranked based on the following 12 freedoms in four broad categories: 1. Rule of Law: Property Rights, Judicial Effectiveness, and Government Integrity; 2. Government Size: Tax Burden, Government Spending, and Fiscal Health; 3. Regulatory Efficiency: Business Freedom, Labor Freedom, and Monetary Freedom; 4. Market Openness: Trade Freedom, Investment Freedom, and Financial Freedom. Singapore topped the list with a total score of 89.4; Hong Kong ranked 2nd with 89.1; New Zealand and Australia took the 3rd and 4th places, respectively; and Switzerland ranked 5th; Ireland, the United Kingdom, and Denmark ranked 6th through 8th, in that order; Canada and Estonia ranked 9th and 10th, respectively; and Taiwan took the 11th spot. The countries that occupied the last three places were North Korea (180th), Venezuela (179th), and Cuba (178th).

The top four countries on the list were all in the Asia-Pacific region. Taiwan did quite well and ranked ahead of Malaysia (24th), South Korea (25th), Japan (30th), Thailand (43rd), Indonesia (54th), the Philippines (70th), and China (103rd).

Singapore, the top performer, is a multiethnic economy with an excellent sovereign credit rating, a well-established government regulatory mechanism and a sound legal system, which are conducive to the creation of open and friendly business and trade environments. Singapore, with the highest degree of economic freedom, is a role model for the rest of the world.