Republic's rating as free economy slipping - report

 

The Republic has slipped one place to seventh in an international ranking of the world's most economically free nations, according to a report released yesterday by the Open Republic Institute (ORI).

ORI director Mr Constantin Gurdgiev said the Republic would continue to slip further down the ranking next year because of a "deficit of new policy developments" and increased market liberalisation in other nations.

He said years of spectacular growth in the private sector had left the public sector lagging behind in the State.

"In the absence of tough measures by the Government to reduce public spending, increase transparency of expenditures and to introduce comprehensive deregulation of labour markets, we can expect further deterioration in Ireland's position in the index, as well as continued slowdown in the domestic economic development," he said.

The report, The Economic Freedom of the World: 2002 Annual Report, shows the Republic slipped one place down the ranking to seventh, with a score of 8.1 out of a possible 10, compared with 8.5 for the previous year.

The period under review was 2000.

The report was released by ORI in the Republic and by a network of 53 other independent institutes worldwide.

ORI is an internationally affiliated Irish-based think-tank comprised of economists and academics.

Economic freedom "is based on personal choice, voluntary exchange, freedom to compete, and protection of the person and property".

It also takes into account issues such as life expectancy and educational development when rating countries.

Hong Kong was judged to be the world's most economically free marketplace with a score of 8.8, followed by Singapore (8.6), the US (8.5) and Britain (8.4).

Mr Gurdgiev said the Republic would continue to slip down the ranking unless a drive to deregulate industry is undertaken.

He said industries such as retail, banking, transportation and real estate were all heavily regulated in the State.

In the area of "regulation of labour", the Republic ranked 30th of the 123 nations featured in the report. But in the section entitled "size of government: expenditures, taxes and enterprise", which measures the size of the government's role in an economy, the Republic ranked 56th.

Mr Gurdgiev said this was because the Irish government's spending "for around five years" had outpaced growth in the private sector.

He also said the Republic did not have a culture of entrepreneurship, while other countries such as Italy, France and Germany were aggressively promoting such a culture and this would contribute to the Republic further slipping down the index.

"Irish entrepreneurs are outside of society - we have to change that," he said.