Do Economic Freedom Rankings Matter?
Oct. 1, 2014, Panama City, Panama: What does Heritage Foundation’s Index Of Economic Freedom mean for the retiree and investor overseas?
Dear Live and Invest Overseas Reader,
A reader wrote in recently to say that he was thinking about relocating from the United States but would consider only those countries with more economic freedom than the United States. This, he explained, meant that he wouldn't be considering any of the countries I write about that aren't ranked higher than the United States in the Heritage Foundation's Index of Economic Freedom.
I responded to say that I thought this a narrow-sighted and severely and unnecessarily limiting approach. The only affordable options that rank better than the United States on the Heritage Foundation's list are Canada, Chile, and Mauritius (the reader also wasn't interested in Mauritius, he told me in the course of the conversation, as he didn't know where it is).
Another reader wrote in recently with links to both the Heritage index and another economic freedom index. The rankings for the two are similar. The top quarter or so is mostly European countries plus Hong Kong, Singapore, Australia, New Zealand, Chile, Peru, and several Middle Eastern countries.
What are you, the global citizen and investor, to take away from all this? Beats me.
All indexes like these are inherently flawed, as they are compilations and rankings of available statistics. They are backward-looking and must push available data into slots as may or may not make sense.
If you're looking to go abroad to start a business, certainly "economic freedom" isn't to be ignored and it comes into play, too, of course, when considering an investment, including a real estate investment. You should factor in the country's economic prospects as you conceive your eventual exit strategy.