Each year the Heritage Foundation and the Wall Street Journal compile a list of the top 10 countries with the freest economies in the world.

This year over 10 different categories of freedom were measured. Things like trade freedom, business freedom, investment freedom, property rights and so on.

The freer the economy the easier and better it is to do business in the corresponding country. It is no coincidence that the same countries in the top of the freest economies in the world list also serve on the top of charts like richest countries in the world and happiest countries.

To find the freest economy in the world 10 different categories were measured within each country. The maximum score was 100 points, meaning that a country with that score would be absolutely free all aspects. No one got the maximum score, but a few countries came close.

10. Chile – 77.2 points (from 100 maximum)

When hearing the name Chile, most people think it is a poor third world country. Not anymore it is!

Among with the rest of Latin American countries Chile used to be a place of poverty but thanks to the reforms in the last 3 decades it has transformed itself to be the freest economy in South America.

The cornerstone of Chile is its sound financial policy allowing for foreign investments to pour into the country. Chile has been keen to sign free trade agreements with countries all over the world.

In addition to its strong financial sector Chile is also the largest exporter of copper in the world.

9. Denmark – 77.9 points

In addition to being the happiest country in the world Denmark is a country with an extraordinarily strong financial sector. The banking crisis of 2008 and 2009 left the country unharmed, mainly because the government’s oversight of the banking industry is working exceptionally well. If the US had a financial oversight body working half as good, we wouldn’t have had the housing bubble that burst in 2008.

Denmark would be even higher in the list of the world’s freest economies if the government would pull back on its spending. The taxes are exceptionally high – some people have to give away 73% of everything they make! If that ain’t crazy, nothing is!

8. USA – 78,0 points

Compared to the year before, the US has lost quite a bit in the freeness of its economy. Because of the economic crisis that started in 2008 the government has decided to accept a number of financial and monetary regulations that have undermined the countries economic freedom.

The government has helped bail out a number of large banks, car manufacturers and other large companies but is itself allowing  its budget to get more and more into deficit.

Some experts seem to agree that the US is heading into bankrupcy.

7. Canada – 80.4 points

Thanks to the declinel of USA, Canada is now the freest North-American economy. Its strengths include lack of corruption, financial freedom and property rights. Unlike the USA, Canada has a budget surplus.

It looks that instead of following the lead of USA, Canada is more closely following its European friends. Just like many countries in Europe, Canada has a great welfare program and many social programs intended to make the lives of their people better.

6. Switzerland – 81.1 points

Switzerland has earned its high place in the freest countries in the world list because of its legendary neutrality. The Swiss never pick sides – this has helped them to stay out of trouble and make the country a fortune.

During the World War 2, Switzerland was the only place where many people could deposit their gold and money. Because of the neutrality they could be sure that the money would be safe and they could withdraw it after the war ends. Capitalizing on the image of neutrality has made Switzerland one of the largest financial centers in the world.

5. Ireland – 81.3 ponts

Ireland is the freest economy in Europe. Although the financial sector got hit when the housing bubble burst in 2008, the overall business climate is excellent.

Throughout the 1990s and the early 2000s Ireland benefited greatly from its flexibility and openness. In recent years one could say that the same openness is also to be partly blamed for the financial crisis currently in Ireland. The government is planning to buy up all the non-performing loans the banks have amassed throughout the last 2 decades.

4. New Zealand – 82.1 points

While most people know New Zealand as a place where the movie Lord of the Ring was filmed, it is also a country with one of the lowest unemployment rates in the freest economies of the world.

The successful regulatory environment supports people starting their own companies. The government has even decided to cut the corporate tax rate to help make the companies of New Zealand more profit. Business freedom in the country is the highest in the world – scoring 99.9 points out of 100.

3. Australia – 82.6 points

Canada is another country that ranks high in financial freedom, property rights, and freedom from corruption. The country is facing its 18th year of uninterrupted economic growth. Internationally Australia is a competitive producer of services, technologies, and high-value-added manufactured goods. Its export sector remains heavily focused on mining and agriculture.

Lately there has been some turmoil about Australia’s government using internet filtering to stop people seeing certain website. It is believed that if such actions continue, Australia will most probably fall in the list of the freest economies of the world.

2. Singapore – 86.1 points

This city state is the most advanced country in Asia. As a financial center Singapore was already used to growing its economy 6-8% per year until the financial crisis of 2008 hit the country. The country is so well run that instead of going into recession Singapore still managed to pull out from 2008 with a 1% economic growth.

Some other good things about Singapore is non existent corruption, extremely low taxes and one of the worlds most effective labor markets.

1. Hong Kong – 89.7 points

Hong Kong has held the position of the freest economy in the world for 15 years straight. Just like Singapore, this little island is one of the world’s largest financial centers. For those not knowing, Hong Kong is actually not a separate country but a part of the People’s Republic of China.

The reason Hong Kong can triumph the list of the freest economies in the world is because it is a separate region in China and therefore goes untouched by the Chinese communism. Hong Kong governs its own affairs and even has his own mini constitution.

Other notable countries

• United Kingdom – 11th place
• Luxembourg – 14th place
• Estonia – 16th place
• Japan – 19th
• Germany – 23rd
• France – 64th
• Italy – 74rd
• India – 124th
• Russia – 143rd

For a complete list of the Top 10 freest economies in the world see the world heritage website.

In the beginning of January last year we made a post about what we predicted will happen in 2009.

2009 is now over. Here is a look back to the predictions and how well we did.

1. The dollar will fall 20% or more against the Chinese yuan.

Verdict: WRONG! The Chinese yuan has staid on the same level in regards to the dollar thanks to the Chinese policy of keeping it fixed to the US dollar (+ some other currencies).

2. The price of gold will be up 10% by the end of the year.

Verdict: WRONG! The price of gold is up 23.4% in 2009. This means that jumped well over the 10% we predicted.

3. The price of oil will stay between 40 and 60 dollars for the most of the year and will rise to as high as 75 dollars/barrel by the end of 2009.

Verdict: CORRECT! The price of oil climbed gradually throughout the year but managed to stay in the 40 to 60 dollars range all the way from January to July. The end of the year saw oil prices rise as high as $79.

4. The Dow Jones Industrial Average will be up about 15%.

Verdict: CORRECT! The Dow Jones Industrial Average was up 19% in 2009. That’s close enough!

5. The world economy will not recover from the financial crisis by the end of 2009.

Verdict: CORRECT! Unemployment rates are the highest in decades. The real estate bubble has not bounced back. The economies of the world are still weak.

6. There will not be any more major bank failures. We will possibly see governments taking proactive steps to save banks and other major companies before they are in actual trouble.

Verdict: CORRECT! Following the failings of 3 major banks in 2008 we have not had any major bank fail in 2009. All the large banks and insurance companies have been saved by the government before they went under. There have however been a large number of smaller banks that have failed and that have not been saved that remain mostly unknown to the public.

7. None of the three big US auto companies will fail in 2009.

Verdict: CORRECT! Despite fears in 2008 and the beginning of 2009 – Ford, General Motors and Chrysler are all here!

8. The housing market does not bounce back.

Verdict: CORRECT! The housing market is down and it doesn’t look like it will bounce back any time soon.

9. Inflation in the US rises.

Verdict: WRONG! According to official figures the inflation plummeted from 3.8% in 2008 to 1.8% in 2009. The USA has however changed how it used to calculate inflation. Using the old method it should be around the 10% figure.

10. Obama’s stimulus package passes in his first months in office.

Verdict: CORRECT! The controversial 800 billion dollar stimulus package was passed in February 2010.

11. More bailout money will be needed by large companies.

Verdict: CORRECT! Bank of America received an additional 20 billion dollar loan  in January 2009 in addition to the 25 billion dollars that bailed them out in October 2008.

12. US economy will not come out of recession.

Verdict: FALSE! The 3rd quarter of 2009 was the first quarter in more than a year that saw economic growth in the US. That means that officially the recession is over. In reality however unemployment rates are highest in decades, consumer fears are still rising and people are saying that it is still a recession.

13. There will be an assassination attempt on Barack Obama. If you won’t hear about it, it is because it will be kept secret.

Verdict: CORRECT! Obviously! Could it have been any other way?

14. Apple will launch a smaller version of the iPhone.

Verdict: FALSE! Although we saw the iPhone 3G S, we are still waiting for a smaller and cooler model. Odds are that we will be waiting for a long time…

15. Financial Jesus will end the year with more than 1000 subscribers.

Verdict: FALSE! 2008 started with a whopping 119 subscribers and ended with 469. We were about 500 users too short.

Total Score

9 out of 15. That is pretty decent if you ask me!

Once a year most of the worlds influential businessmen, politicians, investors and economists meet in Davos, Switzerland to discuss the current state of world economy. This yearly gathering is known as the World Economic Forum.

To give you an idea of how high-level Davos is, you should know that in addition to presidents and prime ministers, it is visited by all of the worlds major banking institutions – starting with the banks bailed out last year and finishing with the leaders of the central banks of USA, Europe and China.
Among this years attendees were more than 70 world leaders and over a hundred of the worlds most influential companies (the likes of ExxonMobil and Coca-Cola).

Main topic in the World Economic Forum

You don’t have to be a genius to figure out what they talked about this year – the economic crisis.

It was revealed by private equity giant Blackstone that the current economic downturn has destroyed over 40% of the world’s wealth during the last 5 quarters and that things are not getting better – they are only getting worse! The world will lose even more of its wealth!

Here are some of the things said during this years summit:

“Worrying about inflation now is like worrying about the measles when you might get the plague.”

Kenneth Rogoff  – Harvard professor and former chief economist of the International Monetary Fund

“The outlook is pretty grim. Things are not good and business surveys are coming out showing they’re getting even worse.”

Sir Howard Davies – London School of Economics

“Confidence grows as slowly as a coconut tree, and falls as fast as a coconut.”

Indian economist, Montek Singh Ahluwalia

“The free enterprise system has not failed; the financial system has failed.”

Tony Blair -Former British Prime Minister

“We cannot underestimate the challenges and the dangers that we face in 2009. We are in a global recession the likes of which we have never seen. But there is no quick fix.“

Stephen S. Roach, Chairman of Morgan Stanley Asia

“The crisis is getting worse. It’s going to take drastic action to turn it around, if it can be turned around, quickly. I believe it will take a long time.”

Rupert Murdoch – Chairman of News Corp

And from a more positive side:

“In times of recession there are massive opportunities and fortunes to be made, so for new up and coming entrepreneurs, this is the time to go and start a business.”

Richard Branson – Founder of The Virgin Group

I agree that things are indeed bad and they will probably get worse before getting better but among all these quotes I especially love the last one from Richard Branson.

The positivity of this serial entrepreneur and billionaire is what keeps the world running – a true businessman always looks to the future and thinks how he can use the mistakes done in the past to build a better business for tomorrow! As long as there are people like Richard Branson – we will be just fine!

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2008 was a mess. Everything changed from great to being a disaster. The markets were down and most of the world’s leading economies slipped into recession.

For most of the world 2009 is not looking any brighter. The United States, Great Britain, France, Germany and Japan are all expecting a standstill of their economies or a recession.

For the first time in decades we are facing a situation where the fastest growing economies will be countries that are virtually unheard of in the western world.

5 fastest growing economies in 2009

Here is a list of top 5 fastest growing countries as predicted by The Economist.

5. China – 8% GDP Growth

China is the only superpower that makes the list of fastest growing countries in 2009. This second largest exporting country (Germany is no 1) has the world’s largest population of 1.3 billion potential consumers. While the rich world is in recession and Chinese exports are taking a hit – China is relying on the growing demand for products from its own people. Thanks to the expanding middle class Chinese economy is as strong as ever.

4. Malawi - 8.3% GDP Growth

This small southeast African country is one of the poorest in the world. For the last few years it has had a democratic government that is rapidly increasing living conditions throughout the country. In addition to having large uranium deposits Malawi is mostly known as an exporter of tobacco, coffee, sugar and tea.

After president Bingu wa Mutharika started a fertilizer program intended to boost crop production Malawi is doing better than ever. The program has radically improved agriculture and allows to export more goods – thus leaving Malawi unaffected from the global recession.

3. Congo (Brazzaville) – 8.5% GDP Growth

This central African country gets most of its income from selling oil, gas and petroleum. Most people live in the capital Brazzaville or in one of the small cities along the countries one and only 332-mile (534 km) railway.

In 1997 a 5 month civil war erupted in Congo – when it ended, president Sassou Nguesso expressed interest in economic reforms with the intent to take the country out of poverty. This reforms are still taking place today.

2. Angola – 9.8% GDP Growth

Just like in the rest of the world – economy in Angola is actually slowing down. In 2005 and 2006 it boasted with economic growth of around 20%. Almost all of the countries economic growth comes from oil and Angola’s ability to sell more of it every following year.

Angola has increased its oil production so much that as of 2007 it is the largest supplier of oil to China.

1. Qatar – 13.4% GDP Growth

It seems that being one of the richest countries in the world is not enough for Qatar. While being a poor country in the past, Qatar discovered huge reserves of oil and gas in the 1940-s,that completely transformed its economy.

Qatar offers most of its services to its citizens for free and has no income tax. The amount of money they get from selling oil is more than enough for their small yet thriving economy.

Never heard about most of these countries?

Don’t worry – neither have your friends. If you leave China out of this list then the combined gross domestic product for Qatar, Angola, Congo and Malawi is about the same as the GDP of Hong Kong (and Hong Kong is just 1 city – although very large).

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