Economic Freedom in Greece Improving, Albeit Slowly

Greece has made its way up four positions in the Global Economic Freedom Index since 2019, but this movement establishes the country in just the 78th place out of 165, according to the Fraser Institute’s Economic Freedom of the World annual report.

The report was released on Tuesday in Greece and Cyprus by the Center for Liberal Studies.

The 2021 annual report published by the Fraser Institute summarized the methodology and purpose of the index as follows:

“The index published in Economic Freedom of the World measures the degree to which the policies and institutions of countries are supportive of economic freedom. The cornerstones of economic freedom are personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately owned property.

“Forty-two data points are used to construct a summary index, along with a Gender Legal Rights Adjustment to measure the extent to which women have the same level of economic freedom as men. The degree of economic freedom is measured in five broad areas.”

Those five areas are size of government, legal system and property rights, soundness of currency, freedom to trade internationally, and jurisdictions.

Economic freedom in Greece still has a long path ahead

Greece is the lowest ranking country in the European Union per the Index. The country scored an average of 7.15 points out of 10, sandwiched between Kyrgyzstan at 77th and North Macedonia at 79th. In the last published report, which covered the year 2018, Greece was positioned at 82. Cyprus was miles ahead of Greece, ranked 24th.

One of the crucial reasons Greece ranks so low is its huge public sector in proportion to its population, which puts it at 146th in the index for government size.

The country was also 142nd in labor market regulations, 86th in regulation, and 79th in business regulations. The country’s highest ranking feature was in the area of credit market regulations, where it sits at 22nd. Greece was also relatively high in other rankings, including 56th in legal system and property rights, 57th in freedom to trade internationally, and 67th in soundness of its money.

Greece’s lowest-ever year on the index was 2015, when the country hit the 96th spot on the list.

“Wealth is primarily generated in one way – i.e. the efficient distribution of resources. This requires transactions in open, competitive markets operating within an institutional framework that guarantees the principles of justice and favors economic growth,” said the Center for Liberal Studies’ research director Aristides Hatzis.

“Greece remains the country with the most closed economy in the EU, having an inefficient institutional framework. Despite the bold reforms in recent years, we remain last in the EU because our competitors are opening up their own markets faster and improving their institutions. Unless that changes, we should not harbor any high expectations for the future,” cautioned Hatzis.