1 Index of Economic Freedom 2010 Index Presentation Jakarta, Indonesia June 25, 2010 James M. Roberts Research Fellow for Economic Freedom and Growth Center for International Trade and Economics The Heritage Foundation

2 Index of Economic Freedom 1995 to 2010: 16 Years of the Index of Economic Freedom

3 Timeless Principles of Economic Freedom Fundamental right of every human to control his or her own labor and property Individuals should be free to work, produce, consume, and invest That freedom should be both protected by the state and unconstrained by the state Governments should allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself Free Markets—Open Competition Index of Economic Freedom

4 1.Business Freedom 2.Trade Freedom 3.Fiscal Freedom 4.Government Spending 5.Monetary Freedom 6.Investment Freedom 7.Financial Freedom 8.Property Rights 9.Freedom from Corruption 10.Labor Freedom Measuring Economic Freedom Index of Economic Freedom Each freedom is measured between 0 and 100. Overall economic freedom score is a simple average of the 10 freedoms (equal weighting).

5 1.Business Freedom - World Bank Doing Business 2.Trade Freedom - World Bank & WTO (Trade Policy Review) 3.Fiscal Freedom - OECD, IMF, Ernst and Young, & Deloitte 4.Government Spending- OECD, IMF, & World Bank 5.Monetary Freedom - IMF, EIU, & central banks 6.Investment Freedom - EIU, IMF, World Bank,& DOC 7.Financial Freedom - EIU, IMF, World Bank, & DOC 8.Property Rights - USDOC, USDOS, IMF, & EIU 9.Freedom from Corruption - Transparency International 10.Labor Freedom - World Bank Doing Business Major Information Sources Index of Economic Freedom Also used to calculate scores: information from various governmental websites; articles from major international/domestic newspapers; and specific country reports from other international organizations such as the Asian Development Bank, UN Commission for Trade and Development (UNCTAD), African Development Bank, and Inter-American Development Bank.

6 Ten Economic Freedoms: Global Averages Index of Economic Freedom

7 Which Countries Enjoy More Economic Freedom? Top 10 “Free” 1.Hong Kong 2.Singapore 3.Australia 4.New Zealand 5.Ireland 6.Switzerland 7.Canada “Mostly Free” 8. United States 9. Denmark 10. Chile Bottom North Korea 178. Zimbabwe 177. Cuba 176. Eritrea 175. Burma 174. Venezuela 173. Libya 172. Dem. Rep. of Congo 171. Turkmenistan 170. Solomon Island Index of Economic Freedom

8 Asia-Pacific’s Performance in the 2010 Index

9 Index of Economic Freedom Economic Freedom by Region

10 Index of Economic Freedom Indonesia's Economic Freedom

11 Indonesia’s Performance: Further Reforms Needed Indonesia’s economic freedom score is 55.5, making its economy the 114th freest in the 2010 Index. Its score has improved by 2.1 points since last year, reflecting improvements in business freedom, fiscal freedom, and freedom from corruption. Indonesia is ranked 21st out of 41 countries in the Asia–Pacific region, and its overall score is below the world average. Recent Improvements: –Improved entrepreneurial environment –Enhanced regional competitiveness –More vibrant private sector through decentralization –Management of public finance has improved; tariff barriers lowered. Lingering institutional impediments—more reforms needed: –Starting a business takes more than twice as long as the world average –Onerous regulations –Investment freedom curtailed by government interference –Pervasive corruption—weak, nontransparent judicial institutions Index of Economic Freedom

12 Index of Economic Freedom Malaysia's Economic Freedom

13 Index of Economic Freedom Cambodia's Economic Freedom

14 Index of Economic Freedom Vietnam's Economic Freedom

15 Index of Economic Freedom Singapore’s Economic Freedom

16 Global Recovery: Keynesianism Is Not The Answer Failure of Government Spending/Fiscal Stimulus to sustain recovery Collapse of welfare state model Index of Economic Freedom

17 How the 20 Largest Economies Performed Index of Economic Freedom

18 Higher Government Spending? Lower Growth … Index of Economic Freedom

19 Fiscal Stimulus – No Impact on Growth Index of Economic Freedom

20 Economic Freedom Matters Higher per Capita Economic Growth Poverty Reduction Improved Good Governance Enhanced Human Development Increased Investment Better Environmental Quality Index of Economic Freedom

21 Index of Economic Freedom Economic Freedom is Key to Prosperity Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at World Bank, World Development Indicator Online,

22 Index of Economic Freedom The Greater Economic Freedom, The Higher Standard of Living Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at World Bank, World Development Indicator Online,

23 Economic Freedom Promotes Good Governance Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at the Economist Intelligence Unit’s Index of Democracy, Country Forecasting Services, Economist Intelligence Unit, at Index of Economic Freedom

24 Economic Freedom Reduces Poverty Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at Human Development Reports, United Nations Human Development Programme, at Index of Economic Freedom

25 Economic Freedom Promotes Human Development Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at Human Development Reports, United Nations Human Development Programme, at Index of Economic Freedom

26 Index of Economic Freedom Freedom of Press Promotes Economic Freedom Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at World Bank, 2008 Freedom of the Press Word Rating

27 Index of Economic Freedom Economic Freedom Attracts Foreign Direct Investment Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at World Bank, 2008 Freedom of the Press Word Rating

28 Economic Freedom is Key to Overall Well-Being Index of Economic Freedom Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at Legatum Prosperity Index: An Inquiry into Global Wealth and Wellbeing, at

29 How to Achieve Better Environmental Protection? Not by Meetings after Meetings… Index of Economic Freedom

30 Economic Freedom Promotes a Clean Environment Sources: Terry Miller and Kim R. Holmes, 2010 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2010), at Daniel C. Esty, M. A. Levy, C. H. Kim, A. de Sherbinin, T. Srebotnjak, and V. Mara, 2008 Environmental Performance Index (New Haven: Yale Center for Environmental Law and Policy, 2008), at Index of Economic Freedom

31 Three Informative Chapters of the 2010 Index Trading for Prosperity by the Honorable Elaine Chao Economic Freedom and Crisis Performance in Asia by Derek Scissors, Ph.D. Access to Information: Vital for Efficient Markets & Economic Reform by James Roberts Index of Economic Freedom

32 Index of Economic Freedom For the first time ever, the U.S. has dropped out of the free category and fallen to mostly free in the 2010 Index of Economic Freedom. Of the world’s 20 largest economies, the U.S. has suffered the largest drop in economic freedom. It’s clear why our economy is failing to generate jobs. To see other highlights from the 2010 Index of Economic Freedom click here.click here. For More Information, Please Visit

33 Thank You! Index of Economic Freedom Q and A Session