Economic Freedom of North America: 2014 Annual Report

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Economic Freedom of North America 2014 is the 10th edition of our annual report, in which we measure the extent to which policies of individual provinces and states are supportive of economic freedom—the ability of individuals to act in the economic sphere free of undue restrictions. For researchers, this report has become the most widely used of the North American indexes. That literature includes more than 100 articles; it has tended to find a positive relationship between economic freedom and a variety of measures such as economic growth, income levels, and entrepreneurial activity.

For the first time, we have been able to include Mexico in the integrated index. In previous editions, Mexico was rated separately from the US states and Canadian provinces due to lack of data and data incompatibility. A strenuous research effort in Mexico overcame this limitation.

All states and provinces were rated on a 10-point scale at two levels, the subnational and the all-government. The subnational index captures the impact of restrictions by state or provincial and local governments; the all-government index also includes restrictions by the federal government. The former is the more appropriate measure for comparisons of individual jurisdictions within the same country. The latter facilitates comparisons of jurisdictions in different countries.

Top and bottom

In the world-adjusted all-government index, the top three jurisdictions (and four of the top five) are Canadian, with Alberta at 8.2 in first place and Saskatchewan at 8.0 in second. The highest ranked US state is Texas, tied for third at 7.7 with two Canadian provinces, Newfoundland & Labrador and British Columbia. The highest ranked Mexican state is Coahuila de Zaragoza, tied with 21 other jurisdictions at 30th with 7.4.

The 18 lowest-ranked jurisdictions are all states in Mexico. There is a tie for last place between Colima and Distrito Federal at 6.1, followed by Chiapas at 6.3. The lowest-ranked Canadian province is Prince Edward Island at 7.1, tied for 65th with nine Mexican states. The lowest-ranked states in the United States are Mississippi and Maine at 7.2, tied for 59th with four Mexican states.

On the subnational index, the top and bottom provinces were Alberta and Quebec. In the United States, Texas and South Dakota were tied for first and Maine was last. The most free Mexican state was Guanajuato and the least free was Chiapas.

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