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The world's largest economy just isn't what it used to be, a new economic ranking suggests, with relatively better growth and liberalization providing ballast to economies in Asia as the United States languished in the middle of the pack of large economies.
This week, the Fraser Institute—a free market think tank—released its annual Economic Freedom of the World report, which showed Hong Kong topping the list of the world's most free economies, with Singapore, New Zealand, Switzerland and Canada rounding out the top five. However, America mired in the 16th spot for the second consecutive year, the institute noted.
More than 20 years after cutting ties with the U.K., Hong Kong has maintained its economic vitality, even as concerns swirl about the health of China. Economists have noted the sluggishness of the world's second largest economy has the potential to tip its autonomous region into recession.
"Economic freedom leads to prosperity and a higher quality of life, while the lowestranked countries are usually burdened by oppressive regimes that limit the freedom and opportunity of their citizens," said the report's authors, Fred McMahon and Michael Walker, in a statement.
With multiple risks encroaching upon the global economy, few of the economies cited by Fraser are actually outperforming. In the 2nd quarter, Hong Kong's economy grew by 1.7 percent, barely edging the 1.2 percent growth rate seen by the U.S. during the comparable time frame. Singapore, meanwhile, is not expected to grow by more than 2 percent this year.
Although the concept of economic freedom can be highly subjective, Fraser's data rank countries according to a series of criteria, including personal freedom, access to markets, respect for private property and the rule of law—assigning an economy a numerical value based on a composite of how they score in each category. The ranking comes with a 2 year lag, so it is based on statistics from, the most recent available.
The report underscores what's become a frequent refrain among critics of the U.S. economy: A high level of regulation is all but suffocating growth. A 2014 survey by the National Association of Manufacturers cited the U.S's labyrinth of environmental, tax and compliance laws as costing the economy $2 trillion. The cost of regulatory compliance was nearly $10,000 per worker annually, NAM's data found.
Several of the least free economies were perennially troubled countries such as Libya, Venezuela—in the throes of wrenching downward spiral that's destabilized its society—and Zimbabwe, the Fraser Institute found. Economic liberalization has a trickle-down effect to per-capita growth, the organization found: The more free the economy, the more wealthy citizens tend to be.
"Countries in the top quartile of economic freedom (such as Singapore, Canada and Chile) had an average per-capita GDP of US$41,228 in 2014, compared to US$5,471 for bottom quartile countries (such as Venezuela, Iran and Zimbabwe)," the report's authors noted.
"In fact, the average income in 2014 of the poorest 10 per cent in the most economically free countries (US$11,283) dwarfed the overall average income in the least free countries (US$5,471)," it said. "And life expectancy is 80.4 years in the top quartile of countries compared to 64 years in the bottom quartile."