Local economy ‘mostly free’ despite labour woes

‘The economy continues to lack a dynamic and broad-based labour market, in part due to the absence of serious reform efforts’, the 2012 Index of Economic Freedom warns

Macau kept the 19th position on the latest edition of an international report on economic freedom but its score dropped, mainly due to labour restrictions and the lack of protection for intellectual property rights.
According to the 2012 Report on the Index of Economic Freedom, released by US conservative think tank Heritage Foundation yesterday, the local economy is ‘mostly free’ with a score of 71.8 points in 100 – equal with Cyprus.
But the territory’s score dropped 1.3 points from last year’s index, “mainly due to declines in labour freedom, freedom from corruption, and the control of government spending,” the report explains. It was the first time Macau’s mark dropped since it was first included, in 2009.
The MSAR’s lowest score, just 50 points, is found in ‘freedom from corruption’. But the think tank stresses that “the Commission Against Corruption has powers of arrest and detention, and a public outreach campaign has led to a significant increase in the number of complaints handled”.
The report also states the lack of labour freedom, which got a score of 55 points. “The economy continues to lack a dynamic and broad-based labour market, in part due to the absence of serious reform efforts,” it states.
Even though government spending got a high mark, 88.1 points, this figure dropped as the public budget took up 19.9 percent of the total wealth created. The liberal-leaning Heritage Foundation favours a ‘small government’.

Structural reforms

Macau’s best score is found in trade freedom, with 90 points. But the report stressed that “non-tariff barriers continue to raise the cost of trade”.
The territory “is in need of more committed structural reforms to enhance the foundations of economic freedom and improve prospects for more broadly based long-term economic development,” the think tank wrote.
In the Asia-Pacific region, the MSAR is ranked 6th out of 41 economies, behind Hong Kong, Singapore, Australia, New Zealand and Taiwan.
Neighbouring HKSAR was considered the world’s freest economy for the 18th straight year. Its score of 89.9 points, a slight improvement over 2011, was enough to outrank runner-up Singapore by more than two points.
Australia, New Zealand and Switzerland were the other countries classified as having a ‘free’ economy, in an index that analysed information for the period between second half of 2010 and the first half of 2011.
The data “demonstrates important relationships between economic freedom and positive social and economic values such as per capita income, economic growth rates, human development, democracy, the elimination of poverty, and environmental protection,” the report says.
North Korea (one point), Zimbabwe (26.3 points) and Cuba (28.3 points) took up the last three positions among 179 countries and territories.