The Heritage Foundation’s prestigious index of economic freedom for 2014 has just been published. It states that over the 20-year history of the Index, the UK’s economic freedom ranking, at 14th, has declined by 3 points. Worryingly, this is the most adverse movement of any European country.
By contrast, Switzerland is #1 in Europe and #5 in the world. The Swiss have stayed out of the €uro but also stayed out of the EU.
The index of economic freedom used by the authors takes into account four components of economic freedom: the size of the state, respect for the rule of law, regulatory efficiency, and the openness of the market.
In Switzerland, the improvement was due to an increase in the freedom of trade, public finance management as well as the openness of the market measured by the freedom of trade and financial freedom. The Swiss economy with its flexibility and openness as well as an efficient regulatory framework, encourages entrepreneurship and innovation. In addition, the Swiss legal system is largely independent with respect to concerning politics, and Switzerland has exceptionally low levels of corruption.
Switzerland’s high ranking demonstrates that a sovereign country can reach a high level of economic freedom while pursuing a policy of independent growth . According to Natasha Srdoc, President and co-founder of the Adriatic Institute for Public Policy, Switzerland won first place in Europe in terms of freedom of trade and monetary freedom: “The fact of being separate from the EU and having its own currency seems to be the best option for Swiss citizens in order to achieve a high level of economic freedom”.
The Swiss case it is another clear example of a sovereign nation achieving highest scores of economic freedom by independently pursuing pro-growth policies. Staying out of the EU and keeping its own currency was evidently the best option for the citizens of Switzerland to achieve higher levels of prosperity and economic freedom. It’s worth noting that Switzerland’s per capita GDP (US$ 78812) is nearly double the UK ($38161), while Norway, also an independent country with its own currency, is more than double ($99170).