Countries with the Most Economic Freedom (2026 Ranked)

Singapore is the freest economy in the world, according to the Heritage Foundation's 2026 Index of Economic Freedom, with a score of 84.4 out of 100. Switzerland (83.7) and Ireland (83.3) follow, and only four of the 176 countries scored reach the "free" band of 80 or above. The Fraser Institute publishes a rival index that crowns a different winner. This article explains how both rankings are built, who sits at the top and bottom, and what a score can and cannot tell you.

Educational only, not financial advice. Investing involves risk of loss; past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.

Economic freedom is a measurable idea: how easily people and firms can own property, sign contracts, hire, trade, and invest without arbitrary interference from the state. Two think tanks have scored it for decades. Both are often accused of favoring low-tax, light-regulation policy, and the accusation has some basis, since both were founded by organizations with free-market commitments. Even so, the scores track things any investor or entrepreneur cares about: whether courts enforce contracts, whether property can be seized, and whether the rules stay put long enough to plan around.

Key takeaways

• Singapore (84.4) leads the Heritage Index in 2026, ahead of Switzerland (83.7) and Ireland (83.3). Only four of 176 countries qualify as "free."
• North Korea (3.1), Cuba (25.2), and Venezuela (27.3) sit at the bottom, where the state controls most economic activity.
• Hong Kong led the Heritage Index every year from 1995 to 2019, but Heritage stopped scoring it separately from mainland China in 2021. The Fraser Institute still ranks it first.
• High economic freedom is not the same as low taxes. Denmark, Norway, and Sweden rank in the top 11 while collecting a large share of national income in tax.
• The United States ranks 22nd in 2026 with 72.8, a gain of 2.6 points that ended a five-year slide.

How the Heritage index is built

The Index of Economic Freedom was created in 1995 by the Heritage Foundation and The Wall Street Journal. The 2026 edition scores 176 countries on 12 indicators, each from 0 to 100, grouped into four pillars. The overall score is the equally weighted average of the 12.

Pillar	Indicators
Rule of law	Property rights, judicial effectiveness, government integrity
Government size	Tax burden, government spending, fiscal health
Regulatory efficiency	Business freedom, labor freedom, monetary freedom
Open markets	Trade freedom, investment freedom, financial freedom

Source: Heritage Foundation, Index of Economic Freedom 2026, as summarized by Libertify and described on Wikipedia.

Scores sort countries into five bands: free (80 to 100), mostly free (70 to 79.9), moderately free (60 to 69.9), mostly unfree (50 to 59.9), and repressed (below 50). Data come from the IMF, the World Bank, UNDP, the Economist Intelligence Unit's Democracy Index, and national statistical agencies. Some indicators are hard numbers, such as tax rates and spending as a share of GDP. Others are judgments, such as how well courts protect property. That mix is the index's main methodological weakness: a country can move a few points because an analyst reassessed a legal system, not because the legal system changed.

Think of the score like a credit rating for a country's rulebook. It does not say whether the people are happy or the economy is large. It says how predictable and open the rules are for anyone who wants to start, run, or finance a business there.

The 2026 ranking: top 20 and the bottom of the table

The table below shows the top 20 countries in the 2026 edition, plus selected others. Ranks and scores for the top 20, the United States, Germany, and the United Kingdom come from the 2026 edition as reproduced on Wikipedia's list of sovereign states by economic freedom. Figures for China and the bottom five come from the Libertify summary of the same edition.

Rank	Country	Score (0-100)	Band
1	Singapore	84.4	Free
2	Switzerland	83.7	Free
3	Ireland	83.3	Free
4	Australia	80.1	Free
5	Taiwan	79.8	Mostly free
6	Luxembourg	79.7	Mostly free
7	Denmark	79.0	Mostly free
8	Norway	78.8	Mostly free
9	Estonia	78.7	Mostly free
10	Netherlands	78.5	Mostly free
11	Sweden	77.8	Mostly free
12	New Zealand	77.8	Mostly free
13	Finland	76.6	Mostly free
14	Canada	75.6	Mostly free
15	Lithuania	75.3	Mostly free
16	Iceland	75.0	Mostly free
17	Chile	74.3	Mostly free
18	Cyprus	74.1	Mostly free
19	South Korea	73.7	Mostly free
20	Czech Republic	73.2	Mostly free
22	United States	72.8	Mostly free
24	Germany	71.7	Mostly free
29	United Kingdom	70.4	Mostly free
154	China	48.3	Repressed
Bottom five	Zimbabwe 35.2, Sudan 32.5, Venezuela 27.3, Cuba 25.2, North Korea 3.1		Repressed

Source: Heritage Foundation, 2026 Index of Economic Freedom. Global average 59.9 (59.7 in 2025). Distribution: 4 free, 27 mostly free, 58 moderately free, 57 mostly unfree, 30 repressed.

Two features stand out. First, the top is crowded with small, open economies: Singapore, Switzerland, Ireland, Luxembourg, Estonia, and Iceland. Among the biggest economies, none reaches the free band; the United States, Germany, and the United Kingdom all score between 70 and 73. Second, the global average of 59.9 sits in the "mostly unfree" band, so the typical country in the world scores below the line that Heritage uses for "moderately free."

Older versions of this ranking circulate widely and differ from these numbers. The 2025 edition, for example, had Singapore at 84.1, Switzerland at 83.7, Ireland at 83.1, Taiwan at 79.7, and Luxembourg at 79.5, with the United States 26th at 70.2, its lowest score in the index's history. India ranked 128th at 53.0 that year, and China 151st, according to a published summary of the 2025 edition. Scores move a point or two a year, but rank order moves more because many countries are bunched together in the 70s.

Singapore: a strong state inside a free market

Singapore has held first place for years, and the reasons are specific rather than ideological.

Courts and contracts. The rule-of-law pillar (property rights, judicial effectiveness, government integrity) carries a quarter of the total score in the Heritage framework, and Singapore's strength there is the foundation of its ranking. Companies weighing a regional headquarters care whether an impartial judge will settle a contract dispute, and that is what this pillar tries to capture.

Trade. Singapore is a port city-state with no farmland or oil, so trade is a survival strategy, not a policy preference. Few goods face tariffs, and the economy imports food, water, and energy.

Taxes that are moderate, not tiny. According to the Inland Revenue Authority of Singapore (IRAS), companies pay a flat 17% of chargeable income, though rebates and incentive schemes lower the effective rate for many. For residents, the top personal rate is 24% on income above S$1 million, raised from 22% beginning with the 2024 tax year, with the 23% band applying between S$500,000 and S$1 million. Those rates are low compared with much of Western Europe but not zero. The state is lean, not absent.

Low corruption. Singapore's founding generation under Lee Kuan Yew made anti-corruption enforcement a priority. The government integrity indicator rewards the result.

The paradox is that a country at the top of an economic freedom ranking restricts political and civil freedoms more than most of its peers do. It has strict speech and assembly rules and imposes capital punishment for drug trafficking above set quantities. Economic freedom, as measured here, and political freedom are separate dimensions, and the index measures only the first. Our look at the most and least democratic countries shows how little the two rankings overlap.

Hong Kong: from first to unranked

Hong Kong finished first in the Heritage ranking every year from 1995 through 2019, according to the record summarized on Wikipedia. That streak ended for administrative reasons as much as economic ones. After China imposed the National Security Law in 2020, Heritage stopped treating Hong Kong and Macau as independent entities in its index, starting with the 2021 edition. The territory therefore no longer appears in the Heritage table at all, which means older rankings that still show Hong Kong in the top 15 do not match Heritage's current method.

The reasons for the change connect directly to the rule-of-law pillar. The National Security Law criminalized broadly worded offenses such as subversion and collusion with foreign forces. Hong Kong's biggest opposition newspaper, Apple Daily, was shut down in June 2021, and the news site Stand News announced its closure on December 29, 2021, on the day six current and former staff members were arrested, according to Reporters Without Borders. Many investors read those events as a sign that the courts and press might no longer act as a check on the state.

The Fraser Institute reaches a different judgment. Its Economic Freedom of the World 2025 report, covering 165 jurisdictions with data through 2023, placed Hong Kong first and Singapore second. The 2026 edition, released in October 2026 with data through 2024, again puts Hong Kong first, but Switzerland moves up to second and Singapore falls to third, according to SCMP. The gap between the two indexes is not a mistake. Heritage folded Hong Kong into China's assessment because of the political change, while Fraser keeps scoring Hong Kong's economy on its own measures, such as trade openness, regulation, and monetary stability, which remained strong.

Heritage versus Fraser: two rulers, two answers

The Fraser Institute, a Canadian think tank, publishes the Economic Freedom of the World index with the Cato Institute and partner organizations. It measures five areas: size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation. It updates with a longer lag than Heritage, so the 2025 report uses 2023 data.

In Fraser's 2025 report (data through 2023), the top two are Hong Kong and Singapore, a different order from Heritage, where Hong Kong is not scored separately. Further down, the orderings diverge more. The difference comes mostly from what each index counts. Heritage includes a fiscal health indicator that penalizes large public debt, and the United States carried public debt of 122.3% of GDP in the 2026 edition's data. Fraser weights its five areas differently, so a country with large deficits can rank higher there than in Heritage's table.

The practical lesson is to compare scores inside one index, never across the two. If a headline says a country "rose" in economic freedom, check which index it uses and which year of data.

The Nordic puzzle

Denmark, Norway, Sweden, and Finland all rank between 7th and 13th in the 2026 Heritage table despite high taxes and large welfare states. That surprises people who equate economic freedom with small government. The explanation is in how the index is assembled.

Of the 12 indicators, only three (tax burden, government spending, and fiscal health) directly penalize a large state. The other nine reward institutions: secure property rights, independent courts, honest officials, easy business formation, open trade, and open capital markets. The Nordic countries score close to the maximum on most of those nine, so strong marks there offset weak marks on tax burden and spending.

The picture matches what economists have long argued about Nordic capitalism. High taxes pay for services, while markets for goods, services, and capital stay open, and firms face little fear of expropriation or bribery. The Nordic model sits between "free market" and "welfare state" in public debate, and the index shows it can be both at once.

A caution is warranted. Equal weighting makes the index sensitive to design choices. If the government-size pillar carried half the total weight, the Nordic countries would fall sharply. The Heritage index treats the nine institutional indicators as three-quarters of the story. Readers who care most about the size of the state should read the pillar scores, not just the overall number.

The United States: 22nd, and rising

In 2026 the United States scored 72.8, up 2.6 points, which Heritage described as the largest gain among major advanced economies and the third-largest among all countries. The jump ended a five-year decline: the 2025 score of 70.2 was the lowest in the index's history. Heritage credited gains in monetary freedom, government spending, fiscal health, and investment freedom.

The country still ranks behind most of northern Europe, Canada, and Australia. Fiscal health is part of the reason, because the United States carries large deficits and public debt of 122.3% of GDP in the 2026 edition's data. Our article on countries with the highest national debt explains how that burden is measured and why debt ratios alone are a poor guide to default risk.

The broader point is that a country can be wealthy, innovative, and rich in capital markets while still scoring in the middle of the "mostly free" group. The index rewards a particular bundle of institutions and fiscal habits, and a score of 72.8 means the United States does well on some of them and poorly on others, not that it is a weak economy.

Movers: Estonia, Argentina, and the cost of standing still

Rankings capture change as well as position, and two cases are instructive.

Estonia reached the top 10 (ninth at 78.7 in 2026) after rebuilding its institutions from scratch following the end of Soviet rule in 1991. Its signature policy is a corporate tax that applies only to distributed profits: companies pay no corporate income tax on reinvested earnings. The rates have changed recently. According to EY, corporate and personal income tax rose from 20% to 22% in 2025, the reduced 14% rate for regular dividends was abolished, a standard VAT rate of 24% took effect on July 1, 2025, and a temporary 2% defense tax adds to personal income tax and corporate profits tax from January 2026 until the end of 2028. Estonia still scores well because the rules are digital, simple, and consistently applied, not because the rate is low.

Argentina gained 3.2 points in the 2026 edition, the largest improvement of any country. Argentina remains far below the top of the table, so the gain measures the direction of policy rather than a finished transformation. It shows how fast scores can change when governments change course, and how they can reverse if the new course does not hold.

At the other end, countries decline when institutions erode. Venezuela's 27.3 reflects expropriations, price controls, and monetary collapse, while North Korea's 3.1 reflects a state that controls nearly all production and trade.

What economic freedom predicts, and what it does not

The strongest empirical pattern is a link between freedom and income. In the Heritage data summarized by Libertify, average GDP per capita at purchasing-power parity runs from roughly $112,351 in "free" economies and $65,635 in "mostly free" ones down to $33,894 in "moderately free," $13,134 in "mostly unfree," and $10,316 in "repressed" countries. Our ranking of GDP per capita shows a similar overlap between rich countries and high-scoring ones.

Three cautions apply before reading causation into that pattern.

1. Reverse causation. Rich countries can afford better courts, regulators, and statistics. Wealth may cause freedom as much as freedom causes wealth.
2. Small sample at the top. The "free" band holds only four economies, all small and open, so its average income says little about how a large country would fare.
3. Natural resources. Gulf states and some resource exporters are rich without scoring near the top, which shows that wealth has more than one source.

Freedom also does not settle inequality. Free markets can generate wealth efficiently without spreading it evenly, and countries with similar economic freedom scores differ widely in inequality depending on tax and transfer policy. Our look at income inequality around the world shows that the two measures have little to do with each other.

Does China break the pattern?

China is the usual counterexample. It ranks 154th with a score of 48.3, in the "repressed" band, yet its economy is the second largest in the world. Our table of the largest economies by GDP shows how it got there.

Defenders of the freedom thesis point out that China's growth began after its 1978 market reforms, which moved the country from an extremely closed starting point toward more open production and trade. Critics reply that China's state-directed investment drove much of the growth, and that rich-country incomes remain far above China's per-person level. Both sides can find support in the data. The most honest reading is that economic freedom is one strong predictor among several, not a law, and that a large country can grow for decades on catch-up investment before institutional weaknesses begin to bind.

How to read an economic freedom ranking

Using the scores well means knowing their limits.

• Check the year and the index. Heritage, Fraser, and a third widely cited measure, the World Bank's former "Doing Business" rankings, answer different questions and sometimes disagree.
• Look at pillar scores, not only the total. A country can rank high thanks to open trade while failing on property rights, or the reverse.
• Remember what is excluded. None of the indexes measures political rights, environmental quality, health, equality, or happiness.
• Treat small differences as noise. Sweden and New Zealand both scored 77.8 in 2026, and a point or two can change a rank by several places when many countries cluster together.
• Watch the trend. A country that rises 3 points in a year, like Argentina, tells you more about policy direction than a country that sits at the top year after year.

Anyone using these rankings to think about investing abroad should pair them with data on corruption, investment flows, and political stability. Our pieces on the most and least corrupt countries and countries attracting the most foreign direct investment show how capital actually moves, which often differs from what index scores alone would predict.

Frequently Asked Questions

Q: Which country has the most economic freedom in 2026? A: Singapore, with a score of 84.4 out of 100 in the Heritage Foundation's 2026 Index of Economic Freedom. Switzerland (83.7), Ireland (83.3), and Australia (80.1) are the only other countries in the "free" band. The Fraser Institute's separate index ranks Hong Kong first; in its 2026 edition (2024 data) Switzerland is second and Singapore third.

Q: Why is Hong Kong missing from the Heritage ranking? A: Heritage stopped scoring Hong Kong and Macau as independent entities beginning with the 2021 edition, after China's National Security Law changed the territory's legal environment. Hong Kong had ranked first in the Heritage index every year from 1995 to 2019. The Fraser Institute still scores Hong Kong separately and ranks it first.

Q: Does economic freedom mean low taxes? A: No. Denmark, Norway, Sweden, and Finland rank between 7th and 13th in the 2026 Heritage index even though they collect high taxes. Only three of the 12 indicators (tax burden, government spending, and fiscal health) measure the size of the state directly. The other nine reward institutions such as property rights, honest courts, and open trade.

Q: Does economic freedom reduce inequality? A: The evidence is mixed. Free markets create wealth efficiently but do not distribute it evenly, and countries with similar freedom scores can have very different levels of inequality depending on taxes and transfers. Redistribution is a separate policy choice, so a high score on either index says little about how evenly income is shared.

Q: Is China a counterexample to the economic freedom thesis? A: It is the standard challenge. China scores 48.3 and ranks 154th in 2026, yet it has the world's second-largest economy. Supporters of the thesis note that growth began from an extremely closed starting point after the 1978 reforms. Critics note that state-directed investment drove much of the expansion. Neither side has settled the question.

Q: How did the United States rank in 2026? A: The United States ranked 22nd with 72.8, up 2.6 points from 2025, when its score of 70.2 was the lowest in the index's history. Heritage credited improvements in monetary freedom, government spending, fiscal health, and investment freedom. Fraser's index weights fiscal health differently and uses different data, so it orders countries differently.

The bottom line

Economic freedom indexes measure the predictability of a country's rules: whether courts enforce contracts, whether property is safe, whether trade and investment are open. Singapore leads the Heritage ranking because it combines a lean, uncorrupt state with open markets, and Hong Kong's disappearance from the Heritage table shows how quickly institutional trust can be repriced. The Nordic cases show that heavy taxes and high scores can coexist, because the index rewards institutional quality more than small government. The scores are useful for comparing legal and regulatory climates, but they say little about equality, democracy, or happiness, and the link to national income is real without being proof of cause.

Sources

• Heritage Foundation, Index of Economic Freedom 2026, via Libertify's summary and the Wikipedia list of sovereign states by economic freedom
• Index of Economic Freedom (Wikipedia): history, methodology, and Hong Kong's treatment
• 2025 Index of Economic Freedom summary (Adda247) for 2025 scores
• Fraser Institute, Economic Freedom of the World 2025 annual report
• Reporting by Reporters Without Borders on the closure of Apple Daily and Stand News
• EY: Estonia significant tax changes 2025-2026
• IRAS, Singapore individual income tax rates

Related Reading

• Countries with the Largest Economies by GDP
• Countries with the Highest Income Tax Rates
• Countries with the Most Corruption
• Countries with the Best Press Freedom
• Countries with the Most Billionaires
• Countries with the Lowest Tax Rates