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INTRODUCTION
Classifying Countries

By per capita GNI (Gross National Income)
– World Development Report by World Bank
(http://www.worldbank.org/)

By economic freedom
– Economic Freedom Survey by Heritage Foundation
(www.heritage.org)

By political freedom
– Freedom in the World by Freedom house
(http://www.freedomhouse.org/)
Per Capita GNI
Economies are divided according to
2000 GNI per capita, calculated using
the World Bank Atlas method.
 low income, $755 or less
 lower middle income, $756- $2,995
 upper middle income, $2,996- $9,265
 high income, $9,266 or more

Political Freedom

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Countries are classified into free, partly free, and
not free. (www.freedomhouse.org)
Two factors in evaluating political freedom:
– Political rights
– civil liberties

Indicators for political rights
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–
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Fair and competitive elections
Power for elected representatives
Ability to organize political parties
Safeguards on rights of minorities
Political Freedom
Continued

Indicators for civil liberties
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Freedom of the press
Equal right under the law
Personal social freedom
Government corruption and indifference
192 countries are rated according to political
rights and civil liberties.
The U.S. and many European countries are
classified as “free”
The worst rated countries include Cuba, Iraq,
Libya, and North Korea.
Economic Freedom

Two factors in evaluating economic freedom
– Freedom from government restraints on economic
activities
– Legal and institutional frameworks to safeguard
economic freedom
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155 countries are ranked according to economic
freedom in 10 categories. (www.heritage.org)
Categories:
– banking, capital flows, monetary policy, taxation, trade
policy, wages and prices, government intervention,
property rights, regulation,and black market activities
Economic Freedom
Continued
Economic freedom and economic wellbeing (measured by per capita GDP) are
highly correlated.
 Hong Kong and Singapore rank first and
second respectively.
 The worst ranked countries are Iraq, Libya,
and North Korea (#155).

Competitiveness
Competitiveness of a country is evaluated
according to its economic performance,
government efficiency, business efficiency
and infrastructure. (www.imd.ch)
 49 countries are rated and ranked.
 The U.S. ranks first and Singapore ranks
second.
