Our Economic Freedom is the Worst It's Been in 3 Years
The Philippines’ economic freedom score stood at 63.8 in 2019, declining from 65.0 in 2018 and further declining from 65.6 in 2017.
That’s according to the 2019 Index of Economic Freedom by The Heritage Foundation, a US-based research organization, which ranks 186 countries according to 12 factors of economic freedom, which can be grouped into four categories: rule of law, government size, regulatory efficiency, and market openness.
With a score of 63.8, the Philippines now ranks 70th among all countries in terms of economic freedom, down from 61st in the previous year. However, the Philippines’ score this year is still above the global average of 60.6 and the Asia-Pacific average of 60.8.
The Heritage Foundation attributed the country's drop in score to the worsening of three of the 12 freedoms, namely: (1) monetary freedom, which measures price stability; (2) government integrity, which analyzes corruption as well as public trust; and (3) tax burden, which looks at taxation rates in the country.
The study also highlighted the country’s judicial system, which it described as “weak and vulnerable to political influence,” as a main area for improvement. It also said that “the absence of entrepreneurial dynamism thwarts development.”
What does it mean?
But what does the 63.8 score and being moderately free in terms of economic freedom mean for the country?
In the 25 years that The Heritage Foundation has published the World Economic Freedom Index, it has observed that countries with higher scores are more likely to further grow and develop economically. It believes that improving these 12 factors are what’s needed to make a nation more prosperous.
“Nations with higher degrees of economic freedom thrive because they capitalize more fully on the ability of individuals to innovate and prosper when unfettered by heavy-handed government regulation and taxation,” it wrote in the study. “Economic freedom is a vital engine for generating the wealth that makes possible the wide range of important economic and social achievements by which we measure the advance of human society.”
More specifically, The Heritage Foundation has also seen a strong correlation between high economic freedom and low incidence of poverty. Despite the Philippines’ lower score, its ranking as moderately free means that it is still in a good position to reduce its poverty levels.
“The intensity of poverty in developing countries whose economies are considered mostly free or moderately free is only about one-third the level prevailing in countries that are rated less free,” it wrote.