GDP Assignment

Free: Taiwan
Background: Taiwan's economy is one of the wealthiest in Asia, second only to
Singapore. The country has a trade driven economy that encompasses electronics, machinery,
petrochemicals, and information/communications products. It has an unemployment rate of
3.8% with a population of 23.4 million.
Overall Ranking: 4th and a score of 80.7
Rule of Law: Property rights, Judicial effectiveness and Government integrity are all
above the global average. As a result of the Hong Kong protests in 2019 and ongoing threats
from China, the Democratic progressive party is more influential than ever and is respected and
supported by a large portion of the population.
Government size: Top individual and corporate taxes rates are 40% and 20%. The
government spending and budget balance averages are 17.2 & -1.7% of GDP which is 1.5 trillion
and $62,527 per capita.
Regulatory efficiency: No minimum capital is required to start a business and business
freedom is well protected as a result of the well-established government. The minimum wage
has been rising since 2017 and Monetary stability is maintained despite the national inflation
rates.
Open Markets: Foreign investment is encouraged and lots of financial services are
provided.

Mostly free: South Korea

Background: South Korea is 5th in Asia and has an overall score higher than the global
average. It has an efficient and well-educated labor force that specializes in electronics,
telecommunications, automobile production, chemicals, shipbuilding, and steel production. An
aging population and government corruption hinder the country’s economic standing and
government integrity.
Overall Ranking: 15th and a score of 73.7
Rule of law: Overall, the rule of law in Korea is well respected, with government
integrity, judicial effectiveness and property rights all above the world average. Despite all that,
ongoing corruption in the legal system may lead to some economic and political failure.
Government size: Top individual and corporate taxes rates are 49.5% and 27.5%. The
government spending and budget balance averages are 24.5% and –0.6% of GDP which is 2.5
trillion and $48,578 per capita.
 Regulatory efficiency: Monetary stability is well maintained despite the nation's
inflation rate which is 2.5%, but trade unions make goods and services more expensive. Tax
reductions encourage the population to join the work force and make big investments such as
buying cars and houses.
Open Markets: Foreign investment is welcome but monitored and regulated. The
financial sector is quite competitive and business start-ups struggle to obtain financing.

Moderately free: Samoa

Background: Samoa is 7th in the Asia-pacific region with relatively high rule of law and
fiscal health scores. The country's economy is heavily reliant on natural resources as 90% of all
exports are from farming and fishing. The government constantly encourages offshore banking
and foreign investment in manufacturing in attempts to grow the economy.
Overall Ranking: 38th and a score of 68.3
Rule of law: The rule of law is well respected in Samoa with government integrity,
judicial effectiveness and property rights all above the world average.
Government size: The top individual and corporate tax rates are 27%. The government
spending and budget balance averages are, respectively, 32.3 percent and 2.9 percent of GDP
which is 1.1 billion and $5,622 per capita. The country's public debts is 46.3% of GDP.
Regulatory efficiency: Entrepreneurial activity is supported but commercial codes are
not straight forward. On account of the fact that the country’s main export is produce and fish,
a modern-day labor market isn't fully developed, and informal labor is still very common.
Inflation also varies widely from year to year.
Open Markets: Once again, as a result of the lack of modern-day labor, a large portion
of the population is disconnected from the formal banking system, which also dominates the
small financial sector.

Mostly unfree: Greece

Background: Greece is 42nd in Europe and most of its scores are below the global
average. Due to a high amount of government and judicial corruption, public debt is close to
200% and fiscal deficit remains unstable. Businesses lose competitiveness and confidence which
severely cripples the country's hope for economic revival. With not many natural resources,
tourism and shipping are Greece’s largest industries.
Overall Ranking: 107th and a score of 56.9
Rule of law: The rule of law is decently respected in Greece with government integrity,
judicial effectiveness and property rights all above the world average.
 Government size: Greece’s government spending and budget balance averages are,
respectively, 54.9% and –6.2% of GDP which is 344.2 billion and $32,218 per capita. Public debt
equals 199.4 percent of GDP, mostly as a result of bad management of taxpayer money.
Regulatory efficiency: The regulatory framework is crumbling due to government
bureaucracy. Labor regulations are restrictive, and the non-salary cost of employing a worker is
high.
Open Markets: Foreign and domestic investment faces bureaucratic barriers, and the
banking sector is riddled with unperforming loans. The lack of money comes from the bailouts
that the country was a part of which only hid the corrupt tax evasion practices that many
politicians and officials are guilty of.

Repressed: China
Background: China’s economy is the 154th freest in the word and 34th in the Asia pacific region.
The rule of law is vulnerable to political influence and Communist Party directives, and
corruption is widespread. The CCP has supreme authority over all financial, political, economic
and in some cases religious activity. Restructuring of economic reform has in most cases
stopped. China has one of the world’s largest economies and is the world’s biggest exporter,
but its income per capita remains below the global average. The CCP chairman Xi Jinping has
removed all political competition and seized control of most aspects of civil life
Overall Ranking: 154th and a score of 48.3
Rule of law: The overall rule of law is weak in China. Its property rights, judicial effectiveness
and Government integrity are all bellow the world average, as most of citizens’ rights and
activities are controlled and monitored by the state
Government size: China’s government spending and budget balance averages are, respectively,
34.1% and –7.3% of GDP which is 27.2 trillion and $19,260 per capita. The top individual and
corporate tax rates are, respectively, 45 percent and 25 percent. The tax burden equals 20.1%
of GDP. Public debt is 71.5%.
Regulatory efficiency: The overall regulatory framework remains complex and uneven. China’s
arbitrary and frequently revised business-related rules and labor codes cause the private sector
to be subjected to the unpredictable whims of the Communist government. The most recent
available inflation rate is 0.9 %. The lack of diverse political and economic perspectives is the
biggest downfall of the country’s economic freedom.
Open Markets: The trade-weighted average tariff rate is 3.2%, and layers of nontariff measures
are in force. China’s protectionist approval system for foreign investment remains restrictive
and lacking in transparency. The government continues to maintain its tight grip on the
financial system.
Graph comparing Rule of Law scores
100

90

80

70

60

50

40

30

20

10

0
China Samoa Taiwan World average

Property Rights Fiscal Health Government Integrity

Summary
What I found very interesting is that for Samoa and Taiwan that are both considered free to
moderately free, fiscal health is highest and government integrity is lowest in their respective
Rules of Law. Due to China’s controlling government, its fiscal health is the lowest on this list
and second is its government integrity which makes sense. Something else that is very
interesting is that Korea has the highest ranked property rights in this list, which could be in
some part caused by their National Housing Corporation.