Global Democracy is in Crises. Economic Freedom Can Help


2020 was yet another dismal year for democracy around the world, according to the latest report by The Economist Intelligence Unit’s Democracy Index (EIU).


This annual survey evaluates the quality of democracy across 167 countries based on five measures — electoral process and pluralism, the functioning of government, political participation, democratic political culture and civil liberties. The report finds that democracy has been in decay around the world in the past year.


Freedom House, a non-profit non-governmental organization that conducts research on democracy, political freedom and human rights came to similar conclusions in its most recent Freedom in the World report. The results showed that democracy and pluralism are under assault in 2020.


The report finds that in Venezuela, Nicolás Maduro’s regime has presided over a worsening political, economic and humanitarian crises that has accelerated the decay of the country's democratic institutions.


Cuba is also continuing its downward spiral towards unfreedom – as the one-party communist state continues to outlaw political pluralism, bans independent media, suppresses dissent and severely restricts basic civil liberties.


Venezuela and Cuba not only lack basic political freedoms – they are also deprived of basic economic freedoms. The Heritage Foundation, a U.S based think tank which measures economic freedom in terms of rule of law, government size, regulatory efficiency and open markets – found in its 2021 Index of Economic Freedom that Venezuela and Cuba rank as the most unfree economies in the world, with only North Korea faring worse.


Meanwhile, countries such as New Zealand, Australia and Switzerland rank in the top five most free economies. It is no coincidence that these countries consistently rank as having robust political freedoms. Countries that enjoy political freedoms simultaneously enjoy economic ones.


India, which was once characterized as a stable democracy – perfectly demonstrates the casual relationship between political and economic freedom. In India, democratic norms have been under pressure since 2015.


On the Economist’s Democracy Index ranking, India's score fell from a peak of 7.92 in 2014 to 6.61 in 2020 and its global ranking slipped from 27th to 53rd as a result of democratic backsliding under the leadership of Narendra Modi, a member of the Hindu-nationalist Bharatiya Janata Party (BJP).


While India’s democracy was slipping, so was its level of economic freedom. According to The Fraser Institute, a Canadian Think Tank, India slipped 26 spots in their annual Economic Freedom of the World report.


Unleashing innovation and productive investment all over the world will yield the sort of economic freedom that will help reverse the world’s democratic recession.


We need to promote policies that will banish fear and pessimism and will instead create trust in the liberal and individualist values and enterprising culture that have historically created the most prosperous societies on earth.