World Rank: 8 Regional Rank: 2 of 3
Ten Economic Freedoms of United States
| 91.3 | Business Freedom | Avg 64.6 | 75.0 | Investment Freedom | Avg 49.0 |
| 86.9 | Trade Freedom | Avg. 74.2 | 70.0 | Financial Freedom | Avg 48.5 |
| 67.5 | Fiscal Freedom | Avg. 75.4 | 85.0 | Property Rights | Avg 43.8 |
| 58.0 | Government Spending | Avg. 65.0 | 73.0 | Fdm. from Corruption | Avg 40.5 |
| 78.1 | Monetary Freedom | Avg. 70.6 | 94.8 | Labor Freedom | Avg 62.1 |
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Quick Facts
Population:
- 304.1 million
GDP (PPP):
- $14.2 trillion
- 1.1% growth
- 2.2% 5-year compound annual growth
- $46,716 per capita
Unemployment:
- 9.4%
Inflation (CPI):
- 3.8%
FDI Inflow:
- $316.1 billion
The United States’ economic freedom score is 78.0, making its economy the 8th freest in the 2010 Index. Its score is 2.7 points lower than last year, reflecting notable decreases in financial freedom, monetary freedom, and property rights. The United States has fallen to 2nd place out of three countries in the North America region.
The U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index.
Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.
The U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index.
Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.
Background Back to the top
The U.S. economy is the world’s largest. Services account for more than 70 percent of economic activity, but the U.S. is also the world’s largest producer of manufactured goods and fourth-largest producer of agricultural products. A federal form of government that reserves significant powers to states and localities has encouraged diverse economic policies and strategies. The national government’s role in the economy, already expanding under President George W. Bush, has grown sharply under the Administration of President Barack Obama, who took office in January 2009. Economic growth, which collapsed in 2008, had resumed by the second half of 2009, but legislative proposals for large and expensive new government programs on health care and energy use (climate change) have increased prospects for significant economic disruptions and raised concerns about the long-term health of the economy.
Business Freedom91.3 Back to the top
The overall freedom to start, operate, and close a business, regulated primarily at the state level, is still strongly protected. Starting a business takes six days, compared to the world average of 35 days. Obtaining a business license takes less than the world average of 218 days. Bankruptcy proceedings are very easy and straightforward.
Trade Freedom86.9 Back to the top
The weighted average U.S. tariff rate was 1.5 percent in 2008. Anti-dumping and countervailing duties, domestic preferences in government procurement, high out-of-quota tariffs, services market access restrictions, import licensing, restrictive labeling and standards, and export-promotion programs and subsidies add to the cost of trade. Ten points were deducted from the U.S. trade freedom score to account for non-tariff barriers.
Fiscal Freedom67.5 Back to the top
U.S. tax rates are burdensome. The top income and corporate tax rates are 35 percent. Other taxes include an estate tax and excise taxes. Additional income, sales, and property taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 28.3 percent.
Government Spending58.0 Back to the top
Total government expenditures, including consumption and transfer payments, are relatively high and rising rapidly. In the most recent year, government spending equaled 37.4 percent of GDP. Spending increases totaled well over $1 trillion in 2009 alone, an increase of more than 20 percent over 2008. Stimulus spending set for the next three years is estimated to equal 5 percent of 2009 GDP.
Monetary Freedom78.1 Back to the top
Inflation has been relatively low, averaging 3.5 percent between 2006 and 2008. The Federal Reserve cut the interest rate on federal funds to near zero in December 2008, with low rates persisting through 2009. Price controls apply to some regulated monopolies; certain states and localities control residential rents; and the government influences prices through subsidies, particularly for the agricultural sector, dairy products, and some forms of transportation. Government interventions in housing, automotive, and financial markets have substantially increased price distortions. Ten points were deducted from the U.S. monetary freedom score to account for policies that distort domestic prices.
Investment Freedom75.0 Back to the top
Foreign and domestic enterprises are legally equal, and foreign investments face federal screening only if perceived as a potential threat to national security. Foreign investment in banking, mining, defense contracting, certain energy-related industries, fishing, shipping, communications, and aviation is restricted. Regulations are generally transparent; individual states may impose additional restrictions. There are few controls on currency transfers, access to foreign exchange, or repatriation of profits. Foreign investors may own most land, subject to some restrictions.
Financial Freedom70.0 Back to the top
The U.S. financial sector has undergone drastic changes since the sub-prime mortgage crisis began in mid-2007, substantially reducing economic freedom. Mortgage guarantors Fannie Mae and Freddie Mac were placed in conservatorship. A number of prominent financial firms or banks have failed; government bailouts have kept others afloat; and the government has intruded on firms’ management in unprecedented ways (for example, by setting caps on executive compensation). Despite the turmoil, the U.S. still has one of the world’s most dynamic and developed financial markets. Foreign financial institutions and domestic banks are subject to the same restrictions. Foreign participation in equities and insurance is substantial. Concerns continue over the intrusive nature and cost of the 2002 Sarbanes–Oxley Act, which increased disclosure and internal control requirements to the detriment particularly of small firms.
Property Rights85.0 Back to the top
Property rights are guaranteed. Contracts are secure, and the judiciary is independent and of high quality. A well-developed licensing system protects patents, trademarks, and copyrights, and laws protecting intellectual property rights are strictly enforced. Government interventions in financial markets and the automotive sector have raised concerns about expropriation and violation of the contractual rights of shareholders and bondholders.
Freedom From Corruption73.0 Back to the top
Corruption is perceived as minimal. The U.S. ranks 18th out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008. The absence of transparency and accountability in the operations of the Troubled Asset Relief Program (TARP) and in other “bailout” programs managed by the Treasury and the Federal Reserve has increased concerns about the potential for government corruption.
Labor Freedom94.8 Back to the top
The United States’ labor regulations are highly flexible. The non-salary cost of employing a worker is low, and dismissing an employee is not burdensome.
Economic Freedom Score
Country’s Score Over Time
Economic Freedom vs. World Avg
Regional Ranking
| Rank | Country | Overall | Change |
|---|---|---|---|
| 1 | Canada | 80.4 | -0.1 |
| 2 | United States | 78 | -2.7 |
Ten Economic Freedoms of United States
| 91.3 | Business Freedom | Avg 64.6 | 75.0 | Investment Freedom | Avg 49.0 |
| 86.9 | Trade Freedom | Avg. 74.2 | 70.0 | Financial Freedom | Avg 48.5 |
| 67.5 | Fiscal Freedom | Avg. 75.4 | 85.0 | Property Rights | Avg 43.8 |
| 58.0 | Government Spending | Avg. 65.0 | 73.0 | Fdm. from Corruption | Avg 40.5 |
| 78.1 | Monetary Freedom | Avg. 70.6 | 94.8 | Labor Freedom | Avg 62.1 |
Download PDF
Quick Facts
Population:
- 304.1 million
GDP (PPP):
- $14.2 trillion
- 1.1% growth
- 2.2% 5-year compound annual growth
- $46,716 per capita
Unemployment:
- 9.4%
Inflation (CPI):
- 3.8%
FDI Inflow:
- $316.1 billion
The United States’ economic freedom score is 78.0, making its economy the 8th freest in the 2010 Index. Its score is 2.7 points lower than last year, reflecting notable decreases in financial freedom, monetary freedom, and property rights. The United States has fallen to 2nd place out of three countries in the North America region.
The U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index.
Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.
The U.S. government’s interventionist responses to the financial and economic crisis that began in 2008 have significantly undermined economic freedom and long-term prospects for economic growth. Economic freedom has declined in seven of the 10 categories measured in the Index.
Uncertainties caused by ongoing regulatory changes and politically influenced stimulus spending have discouraged entrepreneurship and job creation, slowing recovery. Leadership in free trade has been undercut by “Buy American” provisions in stimulus legislation and failure to pursue previously agreed free trade agreements with Panama, Colombia, and South Korea. Tax rates are increasingly uncompetitive, and massive stimulus spending is creating unprecedented deficits. Bailouts of financial and automotive firms have generated concerns about property rights.
Background Back to the top
The U.S. economy is the world’s largest. Services account for more than 70 percent of economic activity, but the U.S. is also the world’s largest producer of manufactured goods and fourth-largest producer of agricultural products. A federal form of government that reserves significant powers to states and localities has encouraged diverse economic policies and strategies. The national government’s role in the economy, already expanding under President George W. Bush, has grown sharply under the Administration of President Barack Obama, who took office in January 2009. Economic growth, which collapsed in 2008, had resumed by the second half of 2009, but legislative proposals for large and expensive new government programs on health care and energy use (climate change) have increased prospects for significant economic disruptions and raised concerns about the long-term health of the economy.
Business Freedom91.3 Back to the top
The overall freedom to start, operate, and close a business, regulated primarily at the state level, is still strongly protected. Starting a business takes six days, compared to the world average of 35 days. Obtaining a business license takes less than the world average of 218 days. Bankruptcy proceedings are very easy and straightforward.
Trade Freedom86.9 Back to the top
The weighted average U.S. tariff rate was 1.5 percent in 2008. Anti-dumping and countervailing duties, domestic preferences in government procurement, high out-of-quota tariffs, services market access restrictions, import licensing, restrictive labeling and standards, and export-promotion programs and subsidies add to the cost of trade. Ten points were deducted from the U.S. trade freedom score to account for non-tariff barriers.
Fiscal Freedom67.5 Back to the top
U.S. tax rates are burdensome. The top income and corporate tax rates are 35 percent. Other taxes include an estate tax and excise taxes. Additional income, sales, and property taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 28.3 percent.
Government Spending58.0 Back to the top
Total government expenditures, including consumption and transfer payments, are relatively high and rising rapidly. In the most recent year, government spending equaled 37.4 percent of GDP. Spending increases totaled well over $1 trillion in 2009 alone, an increase of more than 20 percent over 2008. Stimulus spending set for the next three years is estimated to equal 5 percent of 2009 GDP.
Monetary Freedom78.1 Back to the top
Inflation has been relatively low, averaging 3.5 percent between 2006 and 2008. The Federal Reserve cut the interest rate on federal funds to near zero in December 2008, with low rates persisting through 2009. Price controls apply to some regulated monopolies; certain states and localities control residential rents; and the government influences prices through subsidies, particularly for the agricultural sector, dairy products, and some forms of transportation. Government interventions in housing, automotive, and financial markets have substantially increased price distortions. Ten points were deducted from the U.S. monetary freedom score to account for policies that distort domestic prices.
Investment Freedom75.0 Back to the top
Foreign and domestic enterprises are legally equal, and foreign investments face federal screening only if perceived as a potential threat to national security. Foreign investment in banking, mining, defense contracting, certain energy-related industries, fishing, shipping, communications, and aviation is restricted. Regulations are generally transparent; individual states may impose additional restrictions. There are few controls on currency transfers, access to foreign exchange, or repatriation of profits. Foreign investors may own most land, subject to some restrictions.
Financial Freedom70.0 Back to the top
The U.S. financial sector has undergone drastic changes since the sub-prime mortgage crisis began in mid-2007, substantially reducing economic freedom. Mortgage guarantors Fannie Mae and Freddie Mac were placed in conservatorship. A number of prominent financial firms or banks have failed; government bailouts have kept others afloat; and the government has intruded on firms’ management in unprecedented ways (for example, by setting caps on executive compensation). Despite the turmoil, the U.S. still has one of the world’s most dynamic and developed financial markets. Foreign financial institutions and domestic banks are subject to the same restrictions. Foreign participation in equities and insurance is substantial. Concerns continue over the intrusive nature and cost of the 2002 Sarbanes–Oxley Act, which increased disclosure and internal control requirements to the detriment particularly of small firms.
Property Rights85.0 Back to the top
Property rights are guaranteed. Contracts are secure, and the judiciary is independent and of high quality. A well-developed licensing system protects patents, trademarks, and copyrights, and laws protecting intellectual property rights are strictly enforced. Government interventions in financial markets and the automotive sector have raised concerns about expropriation and violation of the contractual rights of shareholders and bondholders.
Freedom From Corruption73.0 Back to the top
Corruption is perceived as minimal. The U.S. ranks 18th out of 179 countries in Transparency International’s Corruption Perceptions Index for 2008. The absence of transparency and accountability in the operations of the Troubled Asset Relief Program (TARP) and in other “bailout” programs managed by the Treasury and the Federal Reserve has increased concerns about the potential for government corruption.
Labor Freedom94.8 Back to the top
The United States’ labor regulations are highly flexible. The non-salary cost of employing a worker is low, and dismissing an employee is not burdensome.
Economic Freedom Score
Country’s Score Over Time
Economic Freedom vs. World Avg
| World Rank Country Freedom Score Change from Previous |
|---|
| 1 Hong Kong 89.7 -0.3 | 62 Portugal 64.4 -0.5 | 123 Côte d'Ivoire 54.1 -0.9 |
| 2 Singapore 86.1 -1.0 | 63 Romania 64.2 +1.0 | 124 India 53.8 -0.6 |
| 3 Australia 82.6 0.0 | 64 France 64.2 +0.9 | 125 Moldova 53.7 -1.2 |
| 4 New Zealand 82.1 +0.1 | 65 Saudi Arabia 64.1 -0.2 | 126 Papua New Guinea 53.5 -1.3 |
| 5 Ireland 81.3 -0.9 | 66 Thailand 64.1 +1.1 | 127 Tonga 53.4 -0.7 |
| 6 Switzerland 81.1 +1.7 | 67 Turkey 63.8 +2.2 | 128 Tajikistan 53.0 -1.6 |
| 7 Canada 80.4 -0.1 | 68 Montenegro 63.6 +5.4 | 129 Niger 52.9 -0.9 |
| 8 United States 78.0 -2.7 | 69 Madagascar 63.2 +1.0 | 130 Nepal 52.7 -0.5 |
| 9 Denmark 77.9 -1.7 | 70 Dominica 63.2 +0.6 | 131 Suriname 52.5 -1.6 |
| 10 Chile 77.2 -1.1 | 71 Poland 63.2 +2.9 | 132 Cameroon 52.3 -0.7 |
| 11 United Kingdom 76.5 -2.5 | 72 South Africa 62.8 -1.0 | 133 Mauritania 52.0 -1.9 |
| 12 Mauritius 76.3 +2.0 | 73 Greece 62.7 +1.9 | 134 Guinea 51.8 +0.8 |
| 13 Bahrain 76.3 +1.5 | 74 Italy 62.7 +1.3 | 135 Argentina 51.2 -1.1 |
| 14 Luxembourg 75.4 +0.2 | 75 Bulgaria 62.3 -2.3 | 136 Ethiopia 51.2 -1.8 |
| 15 The Netherlands 75.0 -2.0 | 76 Uganda 62.2 -1.3 | 137 Bangladesh 51.1 +3.6 |
| 16 Estonia 74.7 -1.7 | 77 Namibia 62.2 -0.2 | 138 Laos 51.1 +0.7 |
| 17 Finland 73.8 -0.7 | 78 Cape Verde 61.8 +0.5 | 139 Djibouti 51.0 -0.3 |
| 18 Iceland 73.7 -2.2 | 79 Belize 61.5 -1.5 | 140 China 51.0 -2.2 |
| 19 Japan 72.9 +0.1 | 80 Kyrgyz Republic 61.3 -0.5 | 141 Haiti 50.8 +0.3 |
| 20 Macau 72.5 +0.5 | 81 Paraguay 61.3 +0.3 | 142 Micronesia 50.6 -1.1 |
| 21 Sweden 72.4 +1.9 | 82 Kazakhstan 61.0 +0.9 | 143 Russia 50.3 -0.5 |
| 22 Austria 71.6 +0.4 | 83 Guatemala 61.0 +1.6 | 144 Vietnam 49.8 -1.2 |
| 23 Germany 71.1 +0.6 | 84 Samoa 60.4 +0.9 | 145 Syria 49.4 -1.9 |
| 24 Cyprus 70.9 +0.1 | 85 Fiji 60.3 -0.7 | 146 Bolivia 49.4 -4.2 |
| 25 Saint Lucia 70.5 +1.7 | 86 Dominican Republic 60.3 +1.1 | 147 Ecuador 49.3 -3.2 |
| 26 Georgia 70.4 +0.6 | 87 Ghana 60.2 +2.1 | 148 Maldives 49.0 -2.3 |
| 27 Taiwan 70.4 +0.9 | 88 Mongolia 60.0 -2.8 | 149 São Tomé and Príncipe 48.8 +5.0 |
| 28 Botswana 70.3 +0.6 | 89 Lebanon 59.5 +1.4 | 150 Belarus 48.7 +3.7 |
| 29 Lithuania 70.3 +0.3 | 90 Burkina Faso 59.4 -0.1 | 151 Equatorial Guinea 48.6 -2.7 |
| 30 Belgium 70.1 -2.0 | 91 Morocco 59.2 +1.5 | 152 Central African Republic 48.4 +0.1 |
| 31 South Korea 69.9 +1.8 | 92 Croatia 59.2 +4.1 | 153 Guyana 48.4 0.0 |
| 32 El Salvador 69.9 +0.1 | 93 Rwanda 59.1 +4.9 | 154 Angola 48.4 +1.4 |
| 33 Uruguay 69.8 +0.7 | 94 Egypt 59.0 +1.0 | 155 Lesotho 48.1 -1.6 |
| 34 Czech Republic 69.8 +0.4 | 95 Tunisia 58.9 +0.9 | 156 Seychelles 47.9 +0.1 |
| 35 Slovakia 69.7 +0.3 | 96 Azerbaijan 58.8 +0.8 | 157 Sierra Leone 47.9 +0.1 |
| 36 Spain 69.6 -0.5 | 97 Tanzania 58.3 0.0 | 158 Uzbekistan 47.5 -3.0 |
| 37 Norway 69.4 -0.8 | 98 Nicaragua 58.3 -1.5 | 159 Chad 47.5 0.0 |
| 38 Armenia 69.2 -0.7 | 99 Honduras 58.3 -0.4 | 160 Burundi 47.5 -1.3 |
| 39 Qatar 69.0 +3.2 | 100 Zambia 58.0 +1.4 | 161 Togo 47.1 -1.6 |
| 40 Barbados 68.3 -3.2 | 101 Kenya 57.5 -1.2 | 162 Ukraine 46.4 -2.4 |
| 41 Mexico 68.3 +2.5 | 102 Swaziland 57.4 -1.7 | 163 Liberia 46.2 -1.9 |
| 42 Kuwait 67.7 +2.1 | 103 Bhutan 57.0 -0.7 | 164 Timor-Leste 45.8 -4.7 |
| 43 Oman 67.7 +0.7 | 104 Serbia 56.9 +0.3 | 165 Comoros 44.9 +1.6 |
| 44 Israel 67.7 +0.1 | 105 Algeria 56.9 +0.3 | 166 Kiribati 43.7 -2.0 |
| 45 Peru 67.6 +3.0 | 106 Nigeria 56.8 +1.7 | 167 Guinea-Bissau 43.6 -1.8 |
| 46 United Arab Emirates 67.3 +2.6 | 107 Cambodia 56.6 0.0 | 168 Iran 43.4 -1.2 |
| 47 The Bahamas 67.3 -3.0 | 108 Vanuatu 56.4 -2.0 | 169 Republic of Congo 43.2 -2.2 |
| 48 Malta 67.2 +1.1 | 109 The Philippines 56.3 -0.5 | 170 Solomon Islands 42.9 -3.1 |
| 49 Saint Vincent and the Grenadines 66.9 +2.6 | 110 Bosnia and Herzegovina 56.2 +3.1 | 171 Turkmenistan 42.5 -1.7 |
| 50 Latvia 66.2 -0.4 | 111 Mozambique 56.0 +0.3 | 172 Democratic Republic of Congo 41.4 -1.4 |
| 51 Hungary 66.1 -0.7 | 112 Mali 55.6 0.0 | 173 Libya 40.2 -3.3 |
| 52 Jordan 66.1 +0.7 | 113 Brazil 55.6 -1.1 | 174 Venezuela 37.1 -2.8 |
| 53 Albania 66.0 +2.3 | 114 Indonesia 55.5 +2.1 | 175 Burma 36.7 -1.0 |
| 54 Costa Rica 65.9 -0.5 | 115 Benin 55.4 0.0 | 176 Eritrea 35.3 -3.2 |
| 55 Trinidad and Tobago 65.7 -2.3 | 116 Gabon 55.4 +0.4 | 177 Cuba 26.7 -1.2 |
| 56 Macedonia 65.7 +4.5 | 117 Pakistan 55.2 -1.8 | 178 Zimbabwe 21.4 -1.3 |
| 57 Jamaica 65.5 +0.3 | 118 The Gambia 55.1 -0.7 | 179 North Korea 1.0 -1.0 |
| 58 Colombia 65.5 +3.2 | 119 Senegal 54.6 -1.7 | N/A Afghanistan N/A N/A |
| 59 Malaysia 64.8 +0.2 | 120 Sri Lanka 54.6 -1.4 | N/A Iraq N/A N/A |
| 60 Panama 64.8 +0.1 | 121 Yemen 54.4 -2.5 | N/A Liechtenstein N/A N/A |
| 61 Slovenia 64.7 +1.8 | 122 Malawi 54.1 +0.4 | N/A Sudan N/A N/A |
From always being at #1 and in just one year we are #8. That is crazy.
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