Russia stuck between Guinea-Bissau and Vietnam in the ranking of economic freedom

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Published time: January 10, 2013 10:37
Edited time: January 10, 2013 14:37

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Finance, Markets, Russia and the global economy

Russia has moved up 5 points in the rating for economic freedom but remained pretty low in the overall list. It sits in 139th place out of 185 countries, and is classified as “mostly unfree”.

Russia got 51.1 points out of 100 in a scale that measures the level of economic freedom in selected countries, sandwiched between Guinea-Bissau and Vietnam. Asian countries topped the ranking, with Hong Kong, Singapore and Australia taking the top 3 positions in the 2013 Index of Economic Freedom compiled by The Wall Street Journal and The Heritage Foundation think tank.

The grade is assigned according to the state of such economic and social indicators as a rule of law, the amount of the government in the economy, regulatory efficiency and the level of market openness. Burkina Faso, Dominican Republic and Azerbaijan open the section for “mostly unfree” countries, leaving Russia behind with their rankings between 59.7 – 59.9 points.

Another ranking by the World Bank indicating the ease of doing business across 185 countries put Russia 6 places higher in 2012 than the year before – at the number 112 economy. Earlier in the year President Vladimir Putin voiced the ambitious goal to move the country up to 20th place by 2020.However, poor law enforcement, corruption and red tape remain the key stumbling blocks on Russia’s way to a more economically efficient country.

Political realities in Russia also make its economic profile look more dubious, Ms. Bogenrief, from ACM Partners, told Business RT. “It’s no secret the world is, if not outwardly than certainly on the periphery, concerned about Vladimir Putin’s recent re-ascension to the Russian presidency.To many, in 2012, it appeared that the “old Russia” was back, an assumption that demands attention on investment pricing curves.”

On a more positive note,“the World Bank report shows that there has been some improvement in cutting red tape and the recent Transparency International Corruption Perception report also shows a small improvement in Russia’s position,” added Chris Weafer, chief strategist at Sberbank CIB. “Entry into the WTO in August is also a very positive step in this direction. So, a hopeful trend but a lot more needs to be done to attract the greater volume of investors required,” the expert concluded.

According to the Heritage Foundation rating, economic freedom in advanced countries is fading away, which is now a key issue, according to one of the ranking authors Terry Miller, a director of the Center for International Trade and Economics at the Heritage Foundation.

“Particularly concerning are the rise of populist "democratic" movements that use the coercive power of government to redistribute income and control economic activity,” Miller wrote in his comment in the Wall Street Journal.

Among 5 countries classified as “free,” where New Zealand and Switzerland follow the leaders only Singapore managed to improve its performance since the previous ranking. All the rest lost between 0.1 and 0.7 points.

No matter how surprising it may seem, but countries in struggling Europe made the best progress in the ranking, with post – Soviet republics leading the way. Georgia produced the best results, with Estonia and Poland breathing down its neck.

The world economic powerhouse – the US – was just 10th on the list, with Ireland partnering the country as the only advanced economies to have lost economic freedom 5 years in a row. The lack of the US leadership was one of the key reasons for a slowdown in economic liberalization across the globe, as stagnation in the number 1 economy ate into the trade flows.

The study covered the period between the second half of 2011 and the first half of 2012.

Comments (20)

Marzipan6 (unregistered) 12.01.2013 00:41

I take a different view to KIHNU regarding ESTONIA'S post. It is true, we should live in the future, not in the past. But the reality is, that Russia point-blank refuses to do so. It is strongly oriented towards Stalin's lies regarding the Baltics, endlessly repeats them in the guise of supposed history, and predicates its current dealings with the Baltics on the premise of those lies.

It is therefore entirely appropriate that for as long as Russia continues to promulgate those lies, relevant facts be brought to bear.

If Russia repudiates Stalin's lies tomorrow and ceases to repeat them, no one else need ever say anything more about the matter again. But for reasons best known to itself, Russia does not do so. Therefore, and precisely in the interests of the future, Russia's distortions about the past must continue to be challenged and clarified.

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MEJanssen (unregistered) 11.01.2013 21:27

Lord Barrington (unregistered) wrote in #17We've seen what happens to businesses in Russia who threaten the supremacy of Putin and the ruling oligarchs. They go to jail or their company gets cracked down. You don't know what kind of crazy law United Russia is going to propose tomorrow. So if you are planing on investing your money in Russia better think twice. Hopefully things will change one day but right, with Putin practically reelected for another 2 terms, things are going backwards. The West doesn't really care but Russians should: it's their country, their money and their future. ************** From what I have seen proposed in the Duma, the United Russia party does not have a monopoly on crazy sounding bills. And I did invest some of my money a couple of years ago in a Russian company that got in a hissy contest with Putin. Their stock sold off overnight because investors thought he would shut it down. I bought when it was low and doubled my money because, as I guessed, he did not "punish" that company - Mechel. I only wish I could have kept the stock and let it triple in price, but at least my small gain paid for some tuition expenses. I hope next time I have money to invest, Putin will get in another argument with a Russian company and I can bet against fear again. Paranoia by Western investors can be lucrative for cool headed observers.

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Marzipan6 (unregistered) 11.01.2013 11:02

The article mentions four indices and alludes to Russia's and Estonia's relative positions in one, but their relative rankings are not specified for any. Here they are:

* Heritage Foundation Economic Freedom Index: Estonia 13, Russia 139.

* World Bank Ease of Doing Business Index: Estonia 21, Russia 112.

* Transparency International Corruption Perceptions Index: Estonia 32, Russia 133.

*Heritag e Foundation Trade Freedom Index: Estonia 12, Russia 85.

Leaving conspiracy theorists to bluster in their own hot air and instead approaching the subject objectively and logically, what do these consistent results from a variety of prestigious organisations (and many others that are similar) actually indicate? They indicate that Estonia is doing a lot of things right, and that Russia is doing a lot of things wrong. And yet what is the impression one invariably gains from the statements that Russia issues about Estonia, including through RT which faithfully mirror's the Kremlin's positions? The very opposite of the above, namely that Estonia does nothing at all right, is a hotbed of neo-Nazi intrigue, is enmeshed in some kind of backward apartheid regime, and that Russia's assumed superior position in almost every sphere gives it the right to do nothing but endlessly criticise it.

What should we learn from this? That Russian propaganda has the credibility of Rasputin in a chastity seminar. And what should Russia learn from this? That it has a neighbour that deeply understands Russia, its history and its struggles, that wants to be at peace with it, that is succeeding outstandinglly and that has much to contribute to Russia to help it succeed in the same way.

But what prevents Russia from availing itself of such much-needed help? Its desire to instead dominate, domineer and lord it over its neighbours, and its refusal to come to terms with its own history of abuse and bullying of its neighbours.

As a result, Russia continues to languish while its neighbours, that have seen much of the same traumatic history as it has, and that do not have even a fraction of Russia's own natural resources, grow and prosper. You'd think that sooner or later some bright person in the Kremlin would realize that Russia's established policy towards Estonia has been particularly pointless, and that it would be very much in Russia's own interests to fundamentally change it.

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