The inaugural Global Index of Economic Openness (GIEO) by Legatum Institute, a London-based think-tank has excluded Nigeria, while Rwanda, India and China have been added as the countries showing more improvement in an Economic Openness index.
The (GIEO), which ranked 157 countries’ openness to commerce, with analysis of what enables or hinders each country’s ability to trade domestically and internationally, noted that the likes of Rwanda, India and China are spreading global trade, innovation and prosperity, while countries like Nigeria remains stagnant in the quality of Governance
Hence, this stagnation is acting as a brake on Economic Openness and poses a risk to solving social challenges.
According to Legatum Institute, the index is a valuable tool to make the case for economic growth and development. “The benefits of economic competition are widely understood and the language of openness easy to use, so with this Index we are seeking to define and measure openness in a way that can help political leaders and policy makers to effect change by enhancing Economic Openness. Open economies improve domestic and international welfare, and there are many levers for leaders to deploy that can enhance competitiveness and openness, but it requires domestic political will,” Dr Stephen Brien, Director of Policy at The Legatum Institute said.
Key findings:
1. Economic Openness is at its highest ever level globally, with some of even the lowest-ranked countries, improving and lifting millions of people out of poverty
2. Countries with greater levels of Economic Openness are more productive
3. Economic Openness, and therefore economic growth, can be improved by policy choices
4. Governance is key, yet the quality of Governance is stagnating, acting as a brake on Economic Openness
5. Hong Kong is the world’s most open economy, followed by Singapore (2nd) and the Netherlands (3rd) with the United Kingdom 7th and the United States 9th. The most open economy in South America is Chile (31st) and in Africa, South Africa (58th).
6. The countries showing more improvement in Economic Openness include India, China and Rwanda.
• India has reduced the burden of business regulation and made starting a business easier as part of wider liberalising reforms under Prime Minister Modi that has improved Enterprise Conditions by 20 places since 2009.
• China ranks 51st, improving by 13 places since 2009, strengthening Enterprise Conditions and the Environment for Business Creation, using the wide availability of skilled labour. The Chinese government is also prioritising the development of city clusters, notably in the Pearl River Delta, Yangtze River Delta, and the Beijing-Tianjin-Hebei economic zone.
• Rwanda ranks 78th and is the sub-Saharan African country that has improved the most since 2008, with its Investment Environment now ranked 51st after removing restrictions on foreign investment and making key improvements in Enterprise Conditions by reducing burdens such as lengthy tax filing and making it easier to start a business.
• The United Arab Emirates is the best-known example of business-friendly reform in the MENA region, rising 21 places in its Enterprise Conditions pillar to 26th and 3rd for its low Burden of Regulation.