INTRODUCTION

Classifying Countries  By per capita GNI (Gross National Income) –World Development Report by World Bank (  By economic freedom –Economic Freedom Survey by Heritage Foundation (  By political freedom –Freedom in the World by Freedom house (

Per Capita GNI  Economies are divided according to 2000 GNI per capita, calculated using the World Bank Atlas method.Atlas method  low income, $755 or less low income  lower middle income, $756- $2,995 lower middle income  upper middle income, $2,996- $9,265 upper middle income  high income, $9,266 or more high income

Political Freedom  Countries are classified into free, partly free, and not free. (  Two factors in evaluating political freedom: –Political rights –civil liberties  Indicators for political rights –Fair and competitive elections –Power for elected representatives –Ability to organize political parties –Safeguards on rights of minorities

Political Freedom Continued  Indicators for civil liberties –Freedom of the press –Equal right under the law –Personal social freedom –Government corruption and indifference  192 countries are rated according to political rights and civil liberties.  The U.S. and many European countries are classified as “free”  The worst rated countries include Cuba, Iraq, Libya, and North Korea.

Economic Freedom  Two factors in evaluating economic freedom –Freedom from government restraints on economic activities –Legal and institutional frameworks to safeguard economic freedom  155 countries are ranked according to economic freedom in 10 categories. (  Categories: –banking, capital flows, monetary policy, taxation, trade policy, wages and prices, government intervention, property rights, regulation,and black market activities

Economic Freedom Continued  Economic freedom and economic well- being (measured by per capita GDP) are highly correlated.  Hong Kong and Singapore rank first and second respectively.  The worst ranked countries are Iraq, Libya, and North Korea (#155).

Competitiveness  Competitiveness of a country is evaluated according to its economic performance, government efficiency, business efficiency and infrastructure. (  49 countries are rated and ranked.  The U.S. ranks first and Singapore ranks second.