South Africa’s economic freedom declines

South Africa’s level of ‘economic freedom’ has declined over the past decade. SA is now ranked 75 out of 178 countries in the 2014 Index of Economic Freedom, published by the US think tank Heritage Foundation.

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“South Africa is in danger of falling away from economic freedom and prosperity. The labour market remains rigid, exacerbating high unemployment throughout the country. The government should turn to economic freedom to jumpstart growth in the wake of falling commodity prices,” said index co-author Terry Miller.

Ironically, SA’s score is higher than the global average in all but three categories – fiscal‚ labour and investment freedom.

Compared to the sub-Saharan average, SA fares better than its neighbouring countries in all but three categories: fiscal, labour freedom and government spending.

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According to the Heritage Foundation, SA’s highest economic freedom score was recorded in 2003, but the country has failed to show further progress. Its transition to a more open economic system, helped by a relatively competitive trade regime, has been undermined by the failure of structural reforms to diversify the economic base.

However, commenting on the index, the South African Institute of Race Relations noted that SA’s overall economic freedom score of 62,5 is higher than the global average of 60,3.