Economic Freedom Begins Recovery From COVID-Era Government Meddling

Authoritarian pandemic policy made the world poorer and less free.

The good news is that the first 20 years of the millennium saw overall increases in economic freedom around the world—with continuous improvement through the second decade. The bad news is that not just the United States but most of the world lost ground during the massive government interventions of the COVID-19 pandemic. That's unfortunate for individual liberty, but also for prosperity since the economic freedom of a country strongly correlates with higher incomes and lower poverty. The world appears to be recovering freedom and wealth, but it lost years of progress to government meddling.

The World Starts To Regain Lost Ground

The latest edition of the Economic Freedom of the World report, published by Canada's Fraser Institute, the Cato Institute, "and more than 70 think tanks around the world" is out, and it finds the world digging itself out of a hole that started in 2020.

"Overall, the index shows that economic freedom has increased since 2000, but fell precipitously following the coronavirus pandemic, erasing nearly a decade of progress," the authors note. "We take no position on the efficacy of the various public-health policies designed to deal with the coronavirus pandemic; they very well may have saved millions of lives, or they may have been completely ineffectual….Our concern is economic freedom, and on that margin, there is no question that government policies responding to the coronavirus pandemic have reduced economic freedom."

While global economic freedom has started to improve again as the pandemic and its interventions fade into memory, the average across nations is back to where it was in 2012. Weighted for population, which accounts for large countries with statist governments including China, the world's economic freedom is just a hair better than it was in 2013 and has yet to start recovery from the COVID-era dip.

The index shows North America experiencing the largest decline over the measured period, with Latin America, the Caribbean, the Middle East, and North Africa following. "The latter region's decline is especially tragic given its low starting point," comment the authors.

"In 2023—the latest year for which data are available—the 10 highest scoring nations were Hong Kong, Singapore, New Zealand, Switzerland, the United States, Ireland, Australia and Taiwan (tied for 7th), Denmark, and the Netherlands."

Even High-Scoring Jurisdictions Suffer From Interference

Hong Kong has consistently been at or near the top of the index for economic freedom, but that's a sign of a relative position rather than an absolute one. The Chinese government's growing interference in the territory's civil and economic life is doing real damage. "The deterioration in the territory's regulation and legal system and property rights areas is no doubt due to a notorious 2020 security law that seems to have ended China's promise of 'one country, two systems,'" per the report.

Hong Kong isn't the only place suffering from government meddling. As a chapter of the report released early as a standalone publication ("U.S. Economic Freedom in a Trade War") makes clear, America's reborn protectionism under the Trump administration continues to threaten economic freedom:

Due to the President's trade war, US citizens will soon pay some of the highest tariffs in the world. We use these tariffs to offer an estimated preview of US economic freedom in 2025. They cause the country's trade freedom rank to fall from 56th to 76th place, and the US's overall economic freedom rank to fall from 5th to 10th.

Economic Free Countries Have Better Quality of Life

These declines in economic freedom are enormously important not just because they represent an erosion in people's ability to guide their own lives (not that this should be minimized in any way). As the report shows, countries with greater economic freedom have higher per-person gross domestic product (GDP) than less-free countries. More-free countries have lower poverty rates, higher life expectancy, and reduced infant mortality as well. Also, economically free countries have greater personal freedom than unfree countries.

It's interesting to see how closely the COVID-era decline in economic freedom coincides with other misfortunes during the same period of time.

According to the Human Freedom Index, which measures "a broad measure of human freedom, understood as the absence of coercive constraint" and was published in 2024 by the Cato Institute and the Fraser Institute, "87.4 per cent of the world's population lost freedom from 2019 to 2022."

The Economist Intelligence Unit's Democracy Index 2024 reports that "four years after the start of the covid-19 pandemic, which led to a rollback of freedoms around the globe, the 2024 results point to a continuing democratic malaise."

In economic terms, the Human Progress Simon Abundance Index, which "quantifies and measures the relationship between resources and population" and finds that "resources have become 509.4 percent more abundant over the past 43 years" parallels the findings of Economic Freedom of the World. It reports a strong recovery for resource abundance "after a sharp downturn between 2021 and 2022, which was caused by the COVID-19 pandemic, government lockdowns and accompanying monetary expansion, and the Russian invasion of Ukraine."

And the number of people living in poverty is once again shrinking, according to the World Bank. It had alarmingly jumped from 840 million in 2019 to 890 million in 2021 after decades of steady decrease (it was 2.23 billion in 2000). The 2025 figures put the number of the world's poor at 831 million.

Economic Freedom Is Worth Fighting For

So, there's good reason to regret the ground the world lost when government interference in economic activity made the world's economies less free. At the same time, people around the world lost personal and political freedom. People also became poorer as their freedom to buy, sell, own property, and enter into contracts was compromised by presumptuous officials.

By the same token, we should celebrate the seeming return to growth in economic freedom. That freedom is essential to our personal autonomy. We also need it for human flourishing, to defeat poverty and misery. That makes economic freedom something worth fighting for.