Economic Freedom of the World

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274 • Economic Freedom of the World: 2016 Annual Report When government investment was between 15% and 20% of the total, countries received a rating of 8. When government investment was between 20% and 25% of the total, countries were rated at 7. When government investment was between 25% and 30% of the total, countries were assigned a rating of 6. When government investment was generally between 30% and 40% of the total, countries received a rating of 4. When government investment was between 40% and 50% of the total, countries were rated at 2. A rating of zero was assigned when government investment exceeded 50% of total investment. In cases where government investment data were unavailable, we used qualitative data on the scope of SOEs to assign ratings. Sources International Monetary Fund, Government Finance Statistics Yearbook; World Bank, World Development Indicators; International Monetary Fund, International Finance Statistics; World Economic Forum, Global Competitiveness Report; United Nations National Accounts; European Bank for Reconstruction and Development, Transition Indicators. D Top marginal tax rate i Top marginal income tax rate Countries with higher marginal tax rates that take effect at lower income thresholds received lower ratings based on the matrix below. The income threshold data were converted from local currency to 1982/1984 US dollars (using beginning-ofyear exchange rates and the US Consumer Price Index). These figures include subnational rates if applicable. ii Top marginal income and payroll tax rates Countries with higher marginal income and payroll (wage) tax rates that take effect at lower income thresholds received lower ratings based on the matrix below. The income threshold data were converted from local currency to 1982/1984 US dollars (using beginning-of-year exchange rates and the US Consumer Price Index). These figures include sub-national rates if applicable. Sources PricewaterhouseCoopers, Worldwide Tax Summaries Online; PricewaterhouseCoopers, Individual Taxes: A Worldwide Summary (various issues). Top Marginal Tax Rate Income Threshold at Which the Top Marginal Rate Applies (1982/1984 US$)
Area 2 Legal System and Property Rights Appendix: Explanatory Notes and Data Sources • 275 Note The ratings for Area 2 from 1970 to 1995 are the same as the Area V ratings from Economic Freedom of the World: 2001 Annual Report. Please see that report for methodological details. A Judicial independence This component is from the Global Competitiveness Report question: “Is the judiciary in your country independent from political influences of members of government, citizens, or firms? No—heavily influenced (= 1) or Yes—entirely independent (= 7)”. The question’s wording has varied slightly over the years. All variables from the Global Competitiveness Report were converted from the original 1-to-7 scale to a 0-to-10 scale using this formula: EFW i = ((GCR i − 1) ÷ 6) × 10. Source World Economic Forum, Global Competitiveness Report. B Impartial courts This component is from the Global Competitiveness Report question: “The legal framework in your country for private businesses to settle disputes and challenge the legality of government actions and/or regulations is inefficient and subject to manipulation (= 1) or is efficient and follows a clear, neutral process (= 7)”. The question’s wording has varied slightly over the years. Note: The “Rule of Law” ratings from the World Bank’s Governance Indicators Project have been used to fill in data for countries omitted from the primary data source since 1995. Source World Economic Forum, Global Competitiveness Report. C Protection of property rights This component is from the Global Competitiveness Report question: “Property rights, including over financial assets, are poorly defined and not protected by law (= 1) or are clearly defined and well protected by law (= 7)”. Note: This replaces a previous question from the Global Competitiveness Report on protection of intellectual property. Source World Economic Forum, Global Competitiveness Report. D Military interference in rule of law and politics This component is based on the International Country Risk Guide Political Risk Component G. Military in Politics: “A measure of the military’s involvement in politics. Since the military is not elected, involvement, even at a peripheral level, diminishes democratic accountability. Military involvement might stem from an external or internal threat, be symptomatic of underlying difficulties, or be a full-scale military takeover. Over the long term, a system of military government will almost certainly diminish effective governmental functioning, become corrupt, and create an uneasy environment for foreign businesses”. Note: The “Political Stability and Absence of Violence” ratings from the World Bank’s Governance Indicators Project have been used to fill in data for countries omitted from the primary data source since 1995. Sources PRS Group, International Country Risk Guide; World Bank, Governance Indicators. www.freetheworld.com • www.fraserinstitute.org • Fraser Institute ©2016
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Economic Freedom of the World

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