The 2008 Index of Economic Freedom covers 162 countries across 10 indices including business, trade, government and financial freedoms. Hong Kong tops the list. While every region has at least one of the top 20 freest global economies, the majority are found in Europe led by Ireland, Switzerland, the UK and Denmark.

Europe has advanced economic freedom through business climate reforms such as tax cuts adopted by many of the region’s individual economies as they compete with one another to attract more investment, says the report.

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The research also finds economic freedom is strongly related to good economic performance with lower rates of unemployment and inflation most evident in the freest economies: “The world’s freest economies have twice the average per capita income of the second quintile of countries and over five times the average income of the fifth quintile.”