Government crowds out economic freedom
Jo-Maré Duddy – Economic freedom in Namibia, as measured by the internationally acclaimed Canadian think-tank, the Fraser Institute, is the lowest since 1990.
Namibia scored an overall rating of 6.40 out of a possible ten in the Economic Freedom of the World: 2018 Annual Report. This places Namibia in the third quartile of Fraser’s global economic freedom map, just above countries that are least free. Hong Kong, with a rating of 8.97, is the freest country in the world.
The index measures the degree to which the policies and institutions of countries are supportive of economic freedom. “The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property,” Fraser says.
The index uses five pillars to measure a country’s economic freedom: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business. The latest index is based on 2016 data.
Size of government
Size of government looks at the extent to which government spending, taxation, as well as transfers and subsidies to government-controlled enterprises substitute individual choice, thereby reducing economic freedom.
According to Fraser, it measures the “degree to which a country relies on personal choice and markets rather than government budgets and political decision-making. Countries with low levels of government spending as a share of the total, a smaller government enterprise sector, and lower marginal tax rates earn the highest ratings in this area.”
Namibia’s latest rating for size of government is 5.28, the lowest rating since 2000 when it was 5.14. Since then, the country scored 6.21 (2005), 7.07 (2010) and 5.66 (2015).
Under the pillar for size of government, Namibia received its lowest score of 4.00 for “government enterprises and investment”. This, according to Fraser, means government investment generally was between 30% and 40% of total investment in a country. In 2015, Namibia scored 6.00 in this category.
Namibia also fared poorly in the category “government consumption”, which measures general government consumption spending as a percentage of total consumption. Here Namibia’s rating is 4.29, up from 3.79 in 2015.
For “transfers and subsidies” the country scored 6.84, the same as in 2015. This component measures general government transfers and subsidies as a share of gross domestic product (GDP).
Fraser divides its tax category into the top marginal income tax rate, as well as the top marginal income and payroll tax rate. Namibia’s score for all these is 6.00, the same as in 2015.
Other pillars
Namibia’s score for the other pillars on the index are: legal system and property rights 6.44 (2015: 6.51); sound money 6.14 (2015 6.64); freedom to trade internationally 6.36 (2015: 6.39) and regulation 7.76 (2015: 7.83).
Namibia scored an overall rating of 6.40 out of a possible ten in the Economic Freedom of the World: 2018 Annual Report. This places Namibia in the third quartile of Fraser’s global economic freedom map, just above countries that are least free. Hong Kong, with a rating of 8.97, is the freest country in the world.
The index measures the degree to which the policies and institutions of countries are supportive of economic freedom. “The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property,” Fraser says.
The index uses five pillars to measure a country’s economic freedom: size of government, legal structure and security of property rights, access to sound money, freedom to trade internationally, and regulation of credit, labour and business. The latest index is based on 2016 data.
Size of government
Size of government looks at the extent to which government spending, taxation, as well as transfers and subsidies to government-controlled enterprises substitute individual choice, thereby reducing economic freedom.
According to Fraser, it measures the “degree to which a country relies on personal choice and markets rather than government budgets and political decision-making. Countries with low levels of government spending as a share of the total, a smaller government enterprise sector, and lower marginal tax rates earn the highest ratings in this area.”
Namibia’s latest rating for size of government is 5.28, the lowest rating since 2000 when it was 5.14. Since then, the country scored 6.21 (2005), 7.07 (2010) and 5.66 (2015).
Under the pillar for size of government, Namibia received its lowest score of 4.00 for “government enterprises and investment”. This, according to Fraser, means government investment generally was between 30% and 40% of total investment in a country. In 2015, Namibia scored 6.00 in this category.
Namibia also fared poorly in the category “government consumption”, which measures general government consumption spending as a percentage of total consumption. Here Namibia’s rating is 4.29, up from 3.79 in 2015.
For “transfers and subsidies” the country scored 6.84, the same as in 2015. This component measures general government transfers and subsidies as a share of gross domestic product (GDP).
Fraser divides its tax category into the top marginal income tax rate, as well as the top marginal income and payroll tax rate. Namibia’s score for all these is 6.00, the same as in 2015.
Other pillars
Namibia’s score for the other pillars on the index are: legal system and property rights 6.44 (2015: 6.51); sound money 6.14 (2015 6.64); freedom to trade internationally 6.36 (2015: 6.39) and regulation 7.76 (2015: 7.83).
Kommentaar
Republikein
Geen kommentaar is op hierdie artikel gelaat nie