Digital revolution can improve world economy, says report

A report by a respected London-based think-tank has revealed that global economic openness is currently at its highest level.

Leading the way on the findings of the Legatum Institute are Hong Kong, Singapore and the Netherlands, with China, India and Rwanda showing the most improvements.

The report marks the inaugural publication of the Legatum Institute’s Global Index of Economic Openness. It measures the extent to which the economic systems of 157 countries around the world enable trade, competition and productivity, by measuring four pillars that describe the policy choices for countries: market access and infrastructure, investment environment, enterprise conditions and governance.

The role of the institute, which is backed by the Templeton World Charity Foundation, is to strive to provide pathways from poverty to prosperity through economic means and empowering people with technology innovations.

The UK and the US rank seventh and ninth respectively in the index. Chile is the highest ranking South American country at 31^st, with Africa’s highest entry on the list being South Africa at 58^th.

China’s improvements

China’s rise in the rankings by 13 places to 51^st are being attributed to the government’s prioritisation of the development of city clusters, notably in the Pearl River Delta, Yangtze River Delta, and the Beijing-Tianjin-Hebei economic zone. At the same time, the report notes enterprise conditions have been strengthened with the use of widely available skilled labour.

India, meanwhile, has reduced its burden of business regulation and made starting a business easier as part of wider liberalising reforms under Prime Minister Modi, allowing it to climb 20 places.

The report names the United Arab Emirates as the best-known example of business-friendly reform in the MENA region, rising 21 places in its ‘enterprise conditions pillar’ to 26th and third for its low burden of regulation.

The CEO of the Legatum Institute – Baroness Philippa Stroud – said the world was experiencing a digital revolution that presented real opportunities to advance global prosperity.

“Our research shows that open, competitive and connected economies not only increase prosperity for people living in those nations, they also prevent crony capitalism and corruption,” she said.

“At a time when many nations around the world are at a crossroad, we need to restate the case for entrepreneurialism and free markets with a pro-business agenda that is open to trade, skills and investment.

“Economic openness has delivered decades of economic and social wellbeing, turning inwards, putting up barriers and closing our economies to the world poses risks to future prosperity.

“I believe that the onus is on all of us to create and encourage a new wave of economic openness.

“We are now living through a new global digital revolution, and this presents huge opportunities to deliver economic and social prosperity for a new generation.”

Measuring stick

Dr Stephen Brien, Director of Policy at The Legatum Institute, said the index was a measuring stick that could be used by world leaders to revolutionise economies.

“The benefits of economic competition are widely understood and the language of openness easy to use, so with this Index we are seeking to define and measure openness in a way that can help political leaders and policy makers to effect change by enhancing economic openness,” he explained.

“Open economies improve domestic and international welfare, and there are many levers for leaders to deploy that can enhance competitiveness and openness, but it requires domestic political will.”

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