The Wall Street Journal and the Heritage Foundation released its annual 2010 Index of Economic Freedom. Of the world’s 20 largest economies, Hong Kong ranked first while the U.S. came in at number eight.
According to the Wall Street Journal article, The U.S. is Not as Free as It Used to Be, a number of factors contributed to the United States’ ranking lower than in previous years. The federal government’s heavy-handed intervention in the financial and economic crises of the last two years was cited as the main factor.
There is another factor not mentioned in the article that I believe contributed to the US’ lower ranking–the lack of confidence in our nation’s dispute resolution regime.
Businesses are unwilling to wade into a pool of uncertainty to either prosecute or defend valid claims given the exorbitant cost of litigation. While inroads were made in the past decade towards the arbitration of business disputes, the trend has reversed itself under mounting pressure from special interest groups.
While I have no empirical proof, I have a feeling that the top 7 nations have made great strides in their dispute resolution regimes. It’s no surprise Hong Kong is number one given its focus on arbitration, which I wrote about in an earlier post.
Check out the rankings below–what do you think?