The Index of Economic Freedom is an annual index and ranking created in 1995 by The Heritage Foundation and The Wall Street Journal to measure the degree of economic freedom in the world's nations. The creators of the index claim to take an approach inspired by Adam Smith's "The Wealth of Nations", that "basic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society".

The Index of Economic Freedom is an annual index and ranking created in 1995 by The Heritage Foundation and The Wall Street Journal to measure the degree of economic freedom in the world's nations. The creators of the index claim to take an approach inspired by Adam Smith's "The Wealth of Nations", that "basic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society".

The index scores nations on ten factors of economic freedom, separated into four categories, using statistics from organizations like the World Bank, the International Monetary Fund, Economist Intelligence Unit and Transparency International. In each factor, countries are scored 0 to 100, with 0 being the least free and 100 the most free. A score of 100 signifies an economic environment or set of policies that is most conducive to economic freedom. The methodology has shifted and changed as new data and measurements have become available, especially in the area of Labor Freedom, which was given its own indicator spot in 2007.

The ten factors of economic freedom are:

* **Rule of Law** (property rights, government integrity, absence of corruption)

* **Government Size** (government spending, tax burden, government intervention in the economy)

* **Regulatory Efficiency** (business freedom, labor freedom, monetary freedom, trade freedom)

* **Investment Freedom** (capital flows, foreign investment, property rights)

* **Financial Freedom** (banking, insurance, capital markets)

* **Fiscal Freedom** (tax burden, government spending)

* **Trade Freedom** (tariffs, non-tariff barriers, capital flows)

* **Labor Freedom** (freedom of association, the right to strike, minimum wage laws)

* **Property Rights** (protection of property rights, legal system)

The index is calculated by assigning weights to each factor and then averaging the scores for each country. The weights are based on the authors' assessment of the importance of each factor to economic freedom. The index is updated annually and is published in the *Index of Economic Freedom* report.

The Index of Economic Freedom is a widely used measure of economic freedom and is often cited by policymakers, academics, and the media. The index has been criticized for its methodology and its focus on economic freedom at the expense of other social and environmental goals. However, the index remains a valuable tool for understanding the relationship between economic freedom and prosperity.

Here are some of the countries with the highest economic freedom scores in 2023:

* **Singapore** (83.9)

* **Switzerland** (83.8)

* **Ireland** (82.0)

* **Taiwan** (80.7)

* **New Zealand** (78.9)

* **Estonia** (78.6)

* **Luxembourg** (78.4)

* **Netherlands** (78.0)

* **Denmark** (77.6)

Here are some of the countries with the lowest economic freedom scores in 2023:

* **Venezuela** (18.8)

* **North Korea** (16.0)

* **Eritrea** (15.7)

* **Sudan** (14.8)

* **Afghanistan** (14.5)

* **Guinea-Bissau** (14.2)

* **Central African Republic** (13.9)

* **Somalia** (13.8)

* **Chad** (13.7)

The Index of Economic Freedom is a valuable tool for understanding the relationship between economic freedom and prosperity. The index is not without its critics, but it remains a widely used measure of economic freedom.