The annual economic freedom index from the Heritage Foundation and Wall Street Journal is out, ranking 157 economies on 10 economic factors (property rights, regulations, trade, etc.).  The index has long shown a strong correlation between economic freedom and prosperity.  This year’s index shows encouraging news out of Europe, where many countries are moving toward simplified tax codes, such as a flat tax:

While the world as a whole made little progress toward greater economic freedom, there were some surprising improvements by countries such as Mauritius and Mongolia, the survey found.

Hong Kong and Singapore retained their No. 1 and No. 2 rankings respectively on the annual Index of Economic Freedom for the 14th successive year. Both port cities benefit from low taxes and liberalized trade. Hong Kong, however, saw its score dip slightly due to higher inflation and greater tax revenues.

European countries accounted for half of the top 20 economies considered free or mostly free, with Ireland at No. 3, Switzerland at No. 9 and Britain at No. 10. The U.S. ranked No. 5, and Canada ranked 6th.

Moves by newer members of the European Union to introduce straightforward tax policies to attract more investment were having a radical impact on the region as a whole, the authors said.

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