Half of the world's 20 freest economies are in Europe, the only region where most countries are skewed toward freedom, according to the 2008 "Index of Economic Freedom" published annually by The Wall Street Journal and The Heritage Foundation.


The new Index pegs Europe's overall level of economic freedom at 66.8 (on a 100-point scale in which a higher score represents greater freedom). That's solidly ahead of the global average (60.3) and makes Europe the most economically free region in the world.

Its success is based on a number of factors. "Extensive and long-established free-market institutions have generated higher-than-average scores for Europe in eight of the 10 economic freedoms measured," write Index Editors Edwin Feulner, Kim Holmes and Mary Anastasia O'Grady.

However, problems persist. Lingering government intervention has "added to distortionary subsidies in many parts of Europe, is holding down the region's growth potential," they warn.

This year, Ireland leads the regional rankings, finishing third in the worldwide rankings. It's joined in the global top 10 by Switzerland (2nd regionally, 9th overall) and the United Kingdom (3rd regionally/10th overall).

But the ghost of communism still haunts Europe. Russia and Belarus are "repressed" economies. Overall, 21 European economies increased their Index score, while 20 lost ground.

To compile the Index, the editors measured 157 countries across 10 specific factors of economic freedom. The higher the score, the lower the level of government interference. All countries were graded on a scale of 0 to 100.

The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom. Ratings in each category are averaged to produce the overall Index score.

This year's Index aims to be the most precise measure of economic freedom ever published. The editors fine-tuned a methodology first employed last year to grade each economy in the world. "The methodology has been vetted with an academic advisory board and should now even better reflect the details of each country's economic policies," they write.

Worldwide, the average rating for economic freedom held essentially steady "while progressing more slowly than one might hope," the editors write. Of the 157 countries ranked, only seven are classified as "free" (a score of 80 or higher). Another 23 are "mostly free" (70-79.9). The bulk of countries-103 economies-are either "moderately free" (60-60.9) or "mostly unfree" (50-50.9). Some 24 countries have "repressed" economies, with total freedom scores below 50 percent.