Finance

Schizophrenic Asia has the best and worst economic freedoms: report
HONG KONG, Nov 1 (AFP) -

Asia counts four of the world's top 10 freest economies, but the "schizophrenic" region also has six of the most repressed, according to a report released here Wednesday.

Freewheeling Hong Kong came out top in the "2001 Index of Economic Freedom," published by The Heritage Foundation -- a leading US think tank -- and The Wall Street Journal.

But isolated Communist North Korea, which has only this year slowly started to emerge from five decades of self-imposed isolation, came out bottom of the list ranking 155th in the table which judged countries on how heavily governments intervene in their economies.

Singapore placed second in the list, New Zealand came in fourth and Australia ninth.

But Laos ranked 150th with Vietnam and Myanmar in 144 and 145 places, and the Central Asian republics of Uzbekistan and Turkmenistan stood at 149, and 148 respectively.

The 1997 Asian financial crisis had had a profound effect on the regional ecomomy and the Asian tigers, who were once unified by their success, have shown vastly divergent performances in tackling the crisis, the report said.

"Asia as a whole no longer exists as a cohesive entity; it has fractured into subgroups of economically free and unfree," the report said.

"Asia shows the most schizophrenic differentiation of scores of all the regions in the index. Three of the top four freest economies in the world are in the Asia, but so are six of the world's 15 repressed economies," it added.

While Thailand made efforts to liberalise its economy following the 1997 slump, Malaysia, with its "authoritarian" leader, Prime Minister Mahathir Mohamad, had taken "exactly the wrong message" from the Asian economic collapse, said Hugo Restall, editor with The Wall Street Journal.

Mahathir had scared off investors by placing tight government controls on the economy, the report said.
"Through his brutal tactics, Mahathir has assured his personal political survival, but most likely at the long-term expense of the country," the report said.

Thailand, on the other hand, saw the biggest improvement of anywhere in its performance in the index. Lower inflation and government expenditure and reduced tariffs boosted Thailand from 46th to 27th place.
Thailand's improved performance and the worsening prospects in Malaysia were a "graphic demonstration of how democracy can improve economic freedom," said Restall.

South Korea and Taiwan were also cited by Edwin Feulner, president of the Heritage Foundation, as examples where "economic freedom has led to a very competitive political freedom."

The report highlighted the direct correlation between economic freedoms and national prosperity, "so this really matters to the average citizens of these countries," Fuelner said.

China's performance in the index declined this year as a result of the poor job it has made of cleaning up its insolvent banking system but the mainland's imminent entry into the World Trade Organisation should increase increase competition and transparency, it said.

"Annual GDP growth remains robust, averaging more than eight percent, but growth figures mask systemic weaknesses in China's economy that are caused by the general lack of economic freedom," the report said.

The country's economic reforms launched in the late 1970s had stalled partly because of "government reluctance to pay the social and political price of enacting broader economic reforms," it added.
Japan, the world's second biggest economy which has been mired in recession for much of the last decade, seems to be recovering, the report said.

Although Sogo deparment store's recent collapse under a mound of debt "could be only the tip of a red-ink iceberg," the "Big Bang" reforms in financial regulations have lured more foreign direct investment, it said.
Taiwan remains "mostly free" but it had slipped from 11th to 20th place as its practice of intervening in the market to propr up currency and the stock market had harmed its overall score, the report said.

Even though North Korea scored the lowest in all of the index's 10 categories,its economy expanded in 1999 for the first time in 10 years, with a 6.2 percent growth in GDP. This was a result of expanded agricultural production and a massive 360 billion dollars in aid.

Questions or Comments
Copyright © 2000 AFP. All rights reserved. All information displayed in this section (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the contents of this section without the prior written consent of Agence France-Presses.