Solving Poverty’s Toughest Problems • Annual Index of Economic Freedom

One of our most challenging goals in working with the extreme poor is helping the vulnerable provide for themselves and attain financial freedom. Raising incomes can involve many facets, including psychological hurdles. There are cases where individuals are unable to know their capacity and worth outside of generational poverty.

Methods and tactics are other factors we must consider.

How to grow the best crops? Is it better to raise pigs or chickens? What type of fertilizers to use?

Questions like these help the farmer know their options and decide for themselves what is the best strategy. However, things are out of their control but still a factor in determining a successful outcome. These factors are government regulations, inflation, business loan rates, and weather.

One place I like to acquire information on the economic setting for new projects is the Annual Index of Economic Freedom rankings by the Heritage Foundation, a Washington DC think-tank.

The Index covers 12 freedoms from property rights to financial sustainability in 184 countries. Four categories of data measure the rankings for each country:

Annual Index of Economic Freedom rankings by the Heritage Foundation

Rule of Law (property rights, government integrity, judicial effectiveness)
Government Size (government spending, tax burden, fiscal health)
Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
Open Markets (trade freedom, investment freedom, financial freedom)

They state on their websites that “In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself.”