THE Fraser Institute Economic Freedom of the World director Fred McMahon says Zimbabwe’s economy ranks among the least free globally, based on findings in its newly-launched Economic Freedom Country Audit, Zimbabwe (EFCAZ)
Fraser Institute is a Canadian public policy think-tank, which publishes the Economic Freedom of the World annual survey to measure the economic freedom of individuals in different countries.
In this year’s survey, Zimbabwe was ranked 172nd worldwide and 46th in sub-Saharan Africa, with an economic freedom score of 38,2.
The newly-published audit points to the “repressed” state of the economy, highlighting major issues such as high inflation, volatile policies, restrictive licensing and judicial inefficiencies as economic challenges.
The new ranking comes at a time when economists have complained that the economy was intertwined with the volatile political structure the country has.
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Speaking at the launch of the the country’s audit in Harare on Wednesday, McMahon said countries with economic freedom experienced an increased gross domestic product (GDP).
“When people have the freedom to innovate, trade and invest, the entire economy benefits,” he said.
“Economic freedom is simply the ability of individuals and families to make their own economic decisions free of interference from government.”
McMahon said nations with higher economic freedom not only enjoyed robust economic growth, but also a dramatic decrease in poverty levels.
He said data shows that as countries adopted free-market principles and reduced regulatory burdens, they created a conducive environment for job creation and wealth generation.
“Zimbabwe has clearly had problems with inflation in the past. It’s interesting to come to any country and see the American dollar being used. I was just in Ecuador, where the American dollar is a national currency,” he said.
“The trouble is governments can expropriate your property through inflation just as they can through taxation and it takes discipline of the monetary authorities not to do that, which is why some nations move to the US dollar.
“Trade regulations and tariffs, this is absolutely essential for a country like Zimbabwe.”
He said Zimbabwe was not going to become prosperous with a market of about 17 million who were mostly poor.
“Zimbabwe needs the world as its marketplace to become rich and, in fact, one of the great drivers of prosperity creation is trade,” McMahon said.
“It’s an astonishing engine of economic growth. A fact-based study has shown that it’s a real driver for poor nations and yet Zimbabwe has, in effect, erected a trade fence all around itself.”
He added that regulations on business, labour and capital markets did not bode well for the economy.
“The optimal level of regulation is not zero. But if regulation becomes overly burdensome, if it unnecessarily restricts the freedom of individuals to, for instance, get a job or businesses to hire or expand, that dramatically reduces not just economic freedom but the ability to build prosperity in the nation,” McMahon said.
