Croatia is ranked 83rd on the Index of Economic Freedom 2012 published annually by the Washington-based Heritage Foundation and the Wall Street Journal. Croatia’s overall economic freedom score is 60.9, which is above this year’s global average of 59.5.
The country’s overall score is 0.2 point lower than last year when it ranked 82nd, and reflects deteriorated scores in government spending, business freedom and trade freedom. Croatia continues to fall behind other emerging economies in the region, and its overall score remains below the regional average, according to the Index.
The Index notes that, despite some significant improvements over the past five years, Croatia’s scores on most components of economic freedom remain average. The lack of an independent and efficient legal framework undermines the foundations of economic freedom, and corruption remains a serious concern. Inefficient and high public spending has resulted in growing fiscal burdens for the population.
According to the Index, competitive tax reforms and trade liberalization in previous years have contributed to modernization of the economy and the emergence of a vibrant private sector, and revitalizing of reform efforts will be critical to the country’s economic future as its overall progress has been lagging behind that of other emerging markets.
The 18th annual Index of Economic Freedom revealed that economic freedom declined worldwide in 2011 as many countries attempted, without success, to spend their way out of recession. The average economic freedom score for the 2012 Index stands at 59.5 (on a scale in which 100 represents the ideal), down two-tenths of a point from 2011.
The Index measures economic freedom in 10 specific categories: labour freedom, business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights and freedom from corruption. Scores in these categories are averaged to create an overall score.
The Index of Economic Freedom 2012 ranked Hong Kong, Singapore and Australia as the freest economies in the world, while North Korea, Zimbabwe and Cuba finished as the last three among the 179 countries rated.