Index of economic freedom
Luxembourg ranks 15 in The Heritage Foundation’s Index of Economic Freedom 2013. The Grand Duchy has only lost 0.3 points compared to last year earning it third place in the Eurozone behind Estonia and Ireland. The index is of particular interest to companies that are comparing countries with a view to making an investment decision. According to the Foundation, “Economic Freedom is the fundamental right of every human to control his or her own labor and property”.
Despite the Euro crisis, Luxembourg has managed to control its public debt (20.8% of GDP) and to cut government spending. This makes it one of the last remaining countries in the Eurozone with a AAA rating and thus an attractive and competitive business partner with sound public finances.
Luxembourg came off best in the category “open markets”. This rates trade freedom (Luxembourg ranks 11 out of 177), investment freedom (1st) and financial freedom (4th). Another field where Luxembourg stands out is in the protection of private property rights, where it lies in equal second place behind New Zealand.
Nevertheless, according to the authors, “modest declines in regulatory efficiency outweigh small improvements in fiscal policy and government spending”. They highlight Luxembourg’s high unemployment benefits, high minimum wages and protective labour rules. EA