Publication: Monitor Volume: 6 Issue: 206

The Washington-based Heritage Foundation has released its index of economic freedom for the year 2001. Russia came in 127th out of the 155 countries ranked–less free than Rwanda, Ethiopia, Kyrgyzstan and Romania, tied with the Republic of Congo and Mauritania, and more free than Kazakhstan, Togo, Bangladesh and India. While Russia’s raw score–3.70 out of a possible 5 (1 being the freest, 5 being the least free)–was the same as in last year’s index. It in fact dropped down five places on the list, due to improvements in the ratings of other countries.

Russia’s score, which put it in the “Mostly Unfree” category, has been moving downward over the last five years. (It stood at 3.40 for 1995, 3.50 for 1996, 3.55 for 1997, 3.35 for 1998, 3.50 for 1999 and 3.70 for 2000). In the opinion of the authors of the report, Russia has a high level of protectionism, a very high level of government expenditure, a high cost of government, a very high level of inflation, a high level of restrictions in banking and finance, a high level of bureaucratic regulation of the economy and a high level of black market activity. According to the report, President Vladimir Putin “advocates a strong state and market economy, but his conflicts with regional governors and the oligarchs, as well as the ongoing war in Chechnya, continue to undermine Russia’s political stability.” The Russian president’s “attempts to re-examine privatization outcomes,” the report added, “also cause Western investors to question the extent of Russia’s commitment to open and transparent markets based on the rule of law.”

The Heritage Foundation 2001 economic freedom index ranked Hong Kong as the world’s freest state, with the United States coming in fifth. Taiwan was in 20th place, the Czech Republic in 27th, Poland in 54th, Armenia in 68th (tied with Colombia and Mexico, among others), Mongolia in 75th and the People’s Republic of China in 114th place (tied with Georgia, Indonesia, Malawi, Papua New Guinea and Venezuela).