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2. 2 2007 Index of Economic Freedom OUTLINE 1.What’s New? 2.Results 3.How Economic Freedom is Measured 4.Freedom and Prosperity

3. 3 What’s New? 1.Continuity! Ranks, Scores, Usability 2.New Academic Advisory Board 3.New % Scores: 0-100 replaces 5-1 4.New Methodology: More Data-driven 5.New Labor Freedom 6.New Country Page Design 7.New Regions: Europe. Americas.

4. 4 RESULTS: Top 10 1.Hong Kong89.3% 2.Singapore85.7% 3.Australia82.7% 4.United States82.0% 5.New Zealand81.6% 6.United Kingdom81.6% 7.Ireland81.3% 8.Luxembourg79.3% 9.Switzerland79.1% 10.Canada78.7%

5. 5 RESULTS: Distribution

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7. 7 10 Biggest* Economies United States82.0% China54.0% Japan73.6% India55.6% Germany73.5% United Kingdom81.6% France66.1 % Italy63.4% Russia54.0% Brazil60.9% WORLD60.6% * In terms of total GDP

8. 8 William W. Beach, co-chairman, The Heritage Foundation Tim Kane, co-chairman, The Heritage Foundation Maria Sophia Aguirre, Catholic University of America Donald J. Boudreaux, George Mason University Ike Brannon, Economist, Washington, D.C. Simeon Djankov, World Bank Axel Dreher, ETH Zurich Clive Granger, University of California, San Diego Douglas Holtz-Eakin, Council on Foreign Relations Garett Jones, Southern Illinois University Edwardsville Mordechai “Max” Kreinin, Michigan State University Philippe Lacoude, Economist, Paris, France Richard Roll, University of California, Los Angeles Xavier Sala-i-Martin, Columbia University Friedrich Schneider, University of Linz Aaron Smith, University of California, Davis Measuring Freedom: 2007 Advisory Board

9. 9 Measuring Freedom: The 10 Economic Freedoms 1.Business Freedom - Ease of starting business 2.Trade Freedom - Tariffs and barriers 3.Fiscal Freedom - Tax rates and revenue 4.Fdm. from Government - State spending & ownership 5.Monetary Freedom - Inflation and price controls 6.Investment Freedom - Free flow of capital 7.Financial Freedom - Banking institutions 8.Property Rights - Physical & intellectual 9.Fdm. from Corruption - Perception of corruption 10.Labor Freedom - Flexibility of labor market There are 10 Freedoms, each measured 0-100. Overall score is a simple average (equal weights).

10. 10 10 Factors (Old Methodology) Regulation Trade Policy Fiscal Burden Government Intervention Monetary Policy Wages and Prices Foreign Investment Banking and Finance Property Rights Informal Market 10 Freedoms (New Methodology * )   Business Freedom   Trade Freedom   Fiscal Freedom   Freedom from Government   Investment Freedom   Financial Freedom   Property Rights   Freedom from Corruption + Labor Freedom * New methodology is applied to all previous years, 1995-2007   Monetary Freedom Measuring Freedom: Revised Methodology

11. 11 Business Freedom Trade Freedom Fiscal Freedom Freedom from Government Monetary Freedom Investment Freedom Financial Freedom Property Rights Freedom from Corruption Labor Freedom Continuity (100 = no change) Explanation 100 95New Data in 2007 90New Scale in 2007 90New Scale in 2007 90New Scale in 2007 100 2006 to 2007 Introduced in 20040 New Data in 200250 New Scale in 200790 New Scale in 200790 New Scale in 200790 New Data in 200795 100 New Data in 200550 Explanation Continuity (100 = no change) 1995 to 2007 Measuring Freedom: Time Series Continuity

12. 12 Economic Freedom and GDP Per Capita Note: log scale Sources: World Bank, World Development Indicators Online, at publications.worldbank.org/su bscriptions/WDI (subscription required); Central Intelligence Agency, The World Factbook 2005, at www.cia.gov/cia/publications/ factbook/index.html; International Monetary Fund, World Economic Outlook database, April 2006, at www.imf.org/external/pubs/ft/ weo/2006/01/data/index.htm; and Tim Kane, Kim R. Holmes, and Mary Anastasia O’Grady, 2007 Index of Economic Freedom (Washington, D.C.: The Heritage Foundation and Dow Jones & Company, Inc., 2007), at www.heritage.org/index.