Canada is among the top five most economically free countries in the world, well ahead of the U.S., which has fallen to 18th overall, according to the Fraser Institute's Economic Freedom of the World: 2012 Annual Report.
Canada, with an economic freedom score of 7.97 out of 10, tied with Australia to rank fifth out of 144 nations and territories included in the report. Last year, Canada ranked sixth overall.
"Canada's relatively high level of economic freedom has resulted in stronger economic growth, higher income levels and less pain from the global recession," said Fred McMahon, Fraser Institute vice-president of international policy research.
"Meanwhile, other nations embraced heavy-handed regulation and extensive over-spending in response to the American and European debt crises. Consequently, their levels of economic freedom decreased."
The United States, long considered a champion of economic freedom among large industrial nations, continues its protracted decline in the global rankings. This year, the U.S. plunged to 18th, its lowest-ever ranking. Much of this decline is a result of high spending on the part of the U.S. government.
Hong Kong again topped the list, followed by Singapore, New Zealand and Switzerland.
Research shows that people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties and longer life spans.
The annual report uses 42 variables to create a ranking of countries around the world based on policies that encourage economic freedom.
The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to compete and security of private property.
Economic freedom is measured in five different areas, and Canada's scores in those areas were:
- size of government: 6.12 (74th overall);
- legal system and property rights: 8.74 (12th overall);
- access to sound money: 9.46 (25th overall);
- freedom to trade internationally: 7.65 (43rd overall); and
- regulation of credit, labour, and business: 8.48 (sixth overall).
