The Heritage Foundation is an American research institute that studies and analyzes international politics. The institute publishes analytical studies, the most famous of which are the Index of Economic Freedom, Political Experts 2000, and the Mandate for Leadership.
How the index is calculated. Researchers at the research institute have been calculating the Index of Economic Freedom since 1995. It is a global study of countries’ economic policies: how countries help private production, distribute and consume goods, and protect the rights and freedoms of their citizens. The full ranking of countries is published on the institute’s website.
The final score is the arithmetic average of the 10 parameters. For each parameter, the country receives points on a scale from 0 to 100. The parameters have equal weight in the final score.
10 countries with the highest index of economic freedom
Singapore was recognized as the freest country for the second year in a row. The country’s GDP for 2020 was $593.8 billion. At the same time, foreign investors invested $92.1 billion in Singapore’s economy.
Singapore has laws that support local businesses and help them grow. For example, the government helps companies buy back their shares from the stock exchange. Singapore’s unemployment rate is kept at 4.1%, one of the best in the world.
New Zealand was ranked second for government welfare programs. The country’s government increases infrastructure spending every year. The country’s GDP for 2020 was $208.7 billion and foreign direct investment inflows were $5.4 billion.
To come out on top, New Zealand needs to cut taxes and government spending, the institute’s researchers said.
Australia has been the leader of the ranking since 1995 but has lost several points due to high government spending. The country received the highest scores in the categories of property rights protection and independence of business from the government. Australia’s GDP in 2020 is $1 trillion.
Switzerland is the leader among the countries of the European region and ranks 4th in the overall ranking. Switzerland lacks the tax freedoms to become a world leader. Taxes in the cantons are charged at different rates. At the same time, they are higher than the tax rates at the federal level.
Switzerland’s GDP in 2020 was $566.2 billion. Unemployment has been at 4.6% for the past two years. The country has strict respect for property rights and virtually no corruption among government agencies.
Ireland was ranked 5th for improving the quality of the judiciary and privatizing the banking sector. As a result, Ireland has been in the top five since 2000.
There are virtually no cases of forced removal of real estate in Ireland: private property rights are strictly respected. Corruption is rare and severely prosecuted. Ireland’s GDP in 2020 was $417.9 billion. The country’s unemployment rate is 4.9%.
What is the index of economic freedom in countries with investment programs
11 countries in the ranking offer foreigners to obtain citizenship or residence permits by investment. The index of economic freedom in some countries is lower than in the leaders of the ranking. Countries with scores below 70 are called moderately free.
Countries with Citizenship and Residence Permit Programs by Investment
Switzerland ranked 4th. Ownership is strictly regulated by the country’s laws, and there are criminal penalties for corruption among civil servants.
The United Kingdom is also in the top 10. The country’s GDP in 2020 was $3.2 trillion, and unemployment was only 3.9%. This is the best result among the leaders of the ranking.
Austria ranks 25th because of high taxes and government spending. The financial freedom of its citizens has rated 90 points out of 100. By comparison, the leader of the ranking, Singapore, received only 80 points on this parameter.
Cyprus has risen by several positions in the last 8 years. In 2020, it ranks 33rd. Researchers of the institute note the weakness of the judicial system of the state. If the government will revise the legislation governing the courts, Cyprus will become an even freer country.
Malta ranked 36th – the country’s best result since 1995. To maintain its performance and rank higher, Malta needs to continue to fight corruption and improve labour and judicial legislation.
St. Lucia leads among the Caribbean countries. The country has a favourable business environment: there are no taxes, such as capital gains taxes. Foreign investment helps rebuild the economy, which benefits the country’s GDP. In 2020, the GDP was $2.9 billion.
Vanuatu protects citizens’ property rights and helps local companies. The country has no taxes on personal income, wealth, inheritance and capital gains. To rank higher, the institute’s researchers recommend that Vanuatu update its labour laws and reform its judicial system.
How to get citizenship or residence permit in the ranking countries
States with residency and citizenship programs offer different investment options, such as buying real estate, donating money, or starting a business in the country.
Residence permits for financially independent persons are offered in Switzerland and Austria. To obtain a residence permit in Switzerland, the investor pays a lump-sum tax. To do this, the investor enters into an agreement with one of the cantons of the country. Austria issues a residence permit by investment quotas. The government allocates a limited number of quotas – in 2021 there are only 450.
Residence permits in the European Union by investment in the economy are issued by 5 countries.
Portugal and Greece grant temporary residence permits by investment. The programs of these countries provide for several investment options. The most popular is the purchase of the real estate, as objects are allowed to sell after 5 years. Investors not only return the investment but also receive income from the growth of real estate prices.
Cyprus and Malta offer permanent residency by investment. Cyprus offers the status by purchasing real estate, shares of local companies or units of Cypriot investment funds. Under the program of Malta, the purchase or renting of a property on the island – a prerequisite. Also, the investor pays an administrative fee, government fee, a contribution to the Maltese non-governmental organization and proves that he has assets worth € 500,000 or more.
Investors who want to get a residence permit in the UK invest in shares of local companies.
Citizenship of Malta and Montenegro. Malta grants citizenship by Naturalisation for Exceptional Services by Direct Investment. The applicant undergoes a strict vetting process. First, the investor receives a residence permit, and after a year or three years, he can apply for citizenship. And to become a Montenegrin citizen, the investor buys real estate and makes a non-refundable contribution to a state fund.
Citizenship of Caribbean countries and Vanuatu are chosen for the possibility of visa-free travel around the world. Citizens of Saint Lucia, Dominica and Vanuatu travel freely to more than 130 countries, including Schengen and Great Britain. Vanuatu passport processing time is from 1 month and a Caribbean country passport from 2 months.
Immigrant Invest is a licensed agent for European and Caribbean citizenship and residency programs by investment. If you want to move to one of the ranked countries, seek advice from investment program experts.