Pakistan has been ranked 142 out of 165 countries in the Fraser Institute’s Economic Freedom of the World 2021 index, indicating a significantly low degree of economic freedom.
The Canadian think tank’s report revealed that “the index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economies”.
Pakistan’s composite economic freedom rating came in at 5.95 out of 10, which ranked it 142 in a list of 165 countries based on 2019 data. It had scored 5.86 and ranked 135 in the last report published in 2015.
Pakistan has scored 3.6 out of 10 in the category of legal and property rights, 5.7 in freedom to trade internationally, and 6.0 in regulation. Within regulation, it has scored 6.9 in credit market regulations, 5.1 in labor market regulations, and 6.2 in business regulations.
“Due to higher taxes and increased regulation in Pakistan, people are less economically free, which means slower economic growth and less investment in the country,” Fred McMahon, Dr. Michael A Walker Research Chair in Economic Freedom at the Fraser Institute, said.
The government has tightened tax and regulation rules in Pakistan in the last couple of years in a bid to increase accountability and broaden the tax base.
PRIME Institute’s Executive Director, Ali Salman, said “Pakistan is not economically free”.
“This is not a secret. There is a possible relationship between our economic constraints with the restrictions we impose on our individuals and enterprises. Fraser’s report points to some of these restrictions,” he said.
The Fraser Institute’s report that was launched in 1996 measures economic freedom and individuals the ability to make their own economic decisions. It uses a number of indicators, including regulation, freedom to trade internationally, property rights, and taxation, and said that “people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives”.
Hong Kong ranks first, followed by Singapore, New Zealand, Switzerland, Georgia, the United States, Ireland, Lithuania, Australia, and Denmark.
The rankings of other major countries include Japan (18th), Germany (22nd), Italy (47th), France (53rd), Mexico (75th), Russia (100th), India (108th), Brazil (109th), and China (116th).