The 160-page report, which ranks 123 economies, concludes that citizens and businesses in Africa, Latin America and the former Soviet bloc comprise the least economically free countries in the world, with Myanmar claiming the cellar position.

Besides the overall two winners, Asian countries with high marks included Japan and South Korea, tied in 26th place; Thailand (44); the Philippines (51); Malaysia (60); and Sri Lanka (64). Besides Myanmar, the lowest-ranking Asian countries included Indonesia (91), mainland China (100) and Pakistan (101). The report, which was released on the same day as the United Nations’ celebrated Human Development Index (HDI), is based on 38 variables in five major categories designed to measure economic freedom.

The five categories include the size of government, as determined in part by spending, taxes and state enterprises; the legal structure and security of property rights; access to sound money that is not weakened by high inflation rates; the freedom to exchange goods and services with foreigners unencumbered, for example, by tariffs or quotas or currency controls; and the degree to which business and credit and labour markets are regulated by the government.

The basic philosophy guiding the ratings is that of classical economic liberalism or, as the third U. S. President, Thomas Jefferson, famously put it: "That government is best which governs least", except perhaps insofar as it actively protects private-property rights. "Freeing people economically unleashes individual drive and initiative and puts a nation on the road to economic growth," said Nobel Economics laureate Milton Friedman, whose basic economic ideas have acted as guideposts for the report and Cato and the other think-tanks, including the Fraser Institute of Canada, the F. A. Hayek Foundation in Slovakia, the Fundacion Libertad in Argentina, the Centre for Civil Society in India, and the Institute for Advanced Strategic and Political Studies in Israel. "In turn, economic prosperity and independence from government promote civil and political liberty."

At the same time, the study asserted that economic freedom is highly correlated with per capita income, economic growth, and life expectancy and does not necessarily lead to greater income inequality.

Of course, not everyone agrees with this rosy assessment. For years, civil-society organisations around the world have complained that unchecked globalisation and the "free trade" model being pushed by multinational corporations is driving a race to the bottom in environmental and labour standards. This conflict will doubtless come to the fore in September when the World Trade Organisation meets in Cancun, Mexico, where WTO officials hope to advance a new round of "reforms" that will help corporations invest wherever they like while avoiding government regulations.

The just-released Cato report, the seventh in an annual series, should not be confused with the Index of Economic Freedom published by the Wall Street Journal and the right-wing Heritage Foundation, although the results are fairly similar. Like the Cato report, the Index, the most recent version of which appeared last autumn, rated Hong Kong and Singapore as the two economies—out of a total of 156—with the greatest economic freedom.

According to the Cato report, which covers 2001, the year for which the most comprehensive data is available, economic freedom has gained ground around the world over the eight-year period since the first ratings were published for 1995. The average rating for 2001 stood at 6.35, only slightly higher than the previous year, but substantially more than the 5.96 eight years ago.

The report’s authors, economists James Gwartney and Robert Lawson, said the turning point over the past 30 years took place in 1980—coincidentally, perhaps, the same year that the World Bank introduced structural adjustment programmes (SAPs), which were designed to reduce the impact of government on the economy—when ratings averaged 5.36, according to their calculations. "It has been on the rise since then," the reporters said. On a 10-point scale, Hong Kong gained the highest rating for economic freedom at 8.6, closely followed by Singapore at 8.5, the United States of America at 8.3 and New Zealand and the United Kingdom, both at 8.2. The five other nations in the top 10 were Canada, Switzerland, Ireland, Australia, and the Netherlands.