Economy

Index of Economic Freedom: Luxembourg increases its score

Within two years, Luxembourg has advanced from the 21st to the 14th position

Index of Economic FreedomThe American 'Heritage Foundation', in partnership with The Wall Street Journal, has published the 23rd edition of the 'Index of Economic Freedom'. Luxembourg comes in 14th place in this ranking which compares the degree of economic freedom in 180 countries.

Economic freedom is defined as the absence of any kind of coercion or constraint on the part of the government regarding the production, distribution and consumption of goods and services beyond the minimum necessary to protect and maintain citizens' freedom.

The ranking is compiled on the basis of a large number of indicators, which are grouped together in four categories: rule of law, government size, regulatory efficiency and market openness.

An enabling environment for the development of economic activities

Luxembourg ranks 14th worldwide (75.9) and 4th within the EU, and is among the countries considered to be 'mostly free'. The Netherlands rank 15th (75.8), Germany 26th (73.8), Belgium 49th (67.8), and France 72nd (63.3). In Europe, only Switzerland manages to rank in the best category of countries, which are considered to be 'free'.

The report attests notable performances in Luxembourg in terms of rule of law, open markets and monetary stability. It is concerned though with freedom of employment, the level of government expenditure and tax burden. The details of the study reveal that investment freedom (95/100; 1st place) and financial freedom (80/100; 4th place) in Luxembourg are among the best in the world.

Apart from these indicators, Luxembourg is said to boast:

  • excellent performances for property rights (85.8), fiscal health (99), monetary freedom (86.2) and trade freedom (87);
  • good performances for judicial effectiveness (77), government integrity (78.3) and business freedom (68.6);
  • mixed performances for tax burden (64.5), government spending (46) and labour freedom (43.8).

According to the authors of the study, Luxembourg offers strong institutional foundations for an open market conducive to the development of business activities and investments, thanks to the transparency of its regulations and the active encouragement of entrepreneurial activity by the government.

The 2017 index is headed by Hong Kong (89.8), Singapore (88.6) and New Zealand (83.7).

(Source: press release by the Observatory for Competitiveness)

  • Updated 17-02-2017