Azerbaijan improves position in 2021 Economic Freedom Index

In the 2021 economic freedom ranking of the countries, Azerbaijan took the 38th spot out of 178, having improved its position by 6 points compared to 2020. Last year, Azerbaijan advanced 16 points altogether in comparison to 2019.

Report informs citing the Index of Economic Freedom 2021, published annually by the US think tank The Heritage Foundation and The Wall Street Journal.

This year, Azerbaijan's index was 70.1 against 69.3 in the previous report (65.4 in 2019).

"Azerbaijan is ranked 23rd among 45 countries in the Europe region, and its overall score is equal to the regional average but above the world average. The economy of Azerbaijan continues to benefit from greater economic freedom. The country's overall score in 2021 crossed the threshold into the mostly free category. To maintain that status, the government will need to build on the progress it made this year on the three Index rule-of-law indicators: property rights, judicial effectiveness, and government integrity," reads The Heritage Foundation report.

The report notes that Azerbaijan has five preferential trade agreements in force. The trade-weighted average tariff rate is 8.5 percent, and nontariff barriers impede some transactions.

"Azerbaijan is not yet a member of the World Trade Organization. The country has gradually been moving toward greater diversification of its economy. The financial sector is stable but dominated by state-owned banks. No restrictive measures have been introduced in the capital market," the report said.

The top individual income tax rate is 25 percent, and the top corporate tax rate is 20 percent. The overall tax burden equals 13.0 percent of total domestic income. Government spending has amounted to 34.1 percent of total output (GDP) over the past three years, and budget surpluses have averaged 4.2 percent of GDP.

For the second year in a row, Singapore ranked first with 89.7 points out of 100. The city-state was followed by New Zealand (83.9 points) and Australia (82.4). The top five also included Switzerland and Ireland.

The United States took 20th place in the ranking with 74.8 points. The report's authors put Russia in the 92nd place with 61.5 points. China dropped to 107th position (58.4) among 178 countries included in the study. Cuba, Venezuela, and North Korea rounded out the list.

For the first time, The Heritage Foundation did not include Hong Kong in the economic freedom index, which topped the ranking for 25 years and only lost the lead to Singapore last year.

"This year's index measured economic freedom only in independent countries, where governments exercise sovereign control over economic policies. Thus, Hong Kong and Macau are no longer included. Without a doubt, both Hong Kong and Macau, as special administrative regions, exercise economic policies that in many respects offer the population more economic freedom than the average Chinese citizen. However, the events of recent years have clearly demonstrated that Beijing ultimately controls these policies," the publication authors explained.

This rating is annually compiled by experts on the basis of calculations for ten main categories, taking into account the degree of economic and trade freedoms, investment openness, government interference in the economy, the corruption factor, etc. For various reasons, the report authors did not assess Iraq, Libya, Liechtenstein, Somalia, Syria, and Yemen.

The country rankings have been published since 1995. The maximum index that can be awarded to a country is 100, which speaks of absolute freedom. All countries in the ranking are divided into five categories: free (100-80), mostly free (79.9-70), moderately free (69.9-60), mostly unfree (59.9-50), and repressed (49.9-0).