According to the 2015 Index of Economic Freedom, among the six-nation Gulf Cooperation Council (GCC) bloc, Bahrain, Qatar and UAE were found to have the most free economies, while UAE was noted as having made the strongest stride in 2014. The report, brought out by Heritage Foundation and Wall Street Journal, relies on a diverse number of variables related to the level of economic freedom, including the rule of law, property rights and freedom from corruption. Other metrics relate to regulatory efficiency, specifically business, labor and monetary freedom; the extent of government role; and trade, investment and financial freedoms. In turn, each variable carries 10 points on the 100-point maximum scale.
The three economies in the GCC which scored higher rankings have fiscal and monetary policies that reflect the near absence of taxation. However, not a single GCC member state is among the exclusive free category, which comprises Hong Kong, Singapore, New Zealand, Australia and Switzerland in that same order.
Ranked 18th worldwide, Bahrain leads the GCC with regard to economic freedom, but has seen it concede five rankings in a single year. The Gulf state had enjoyed global rankings of 13 and 12 in 2014 and 2013, respectively. The decline partly reflects the stronger involvement of the public sector in the economy since the events of February 2011, and which go against the Index’s doctrine.
The UAE saw its ranking rise by three notches, therefore securing the 25th place worldwide and the second best within the Mena region. The progress recognizes the steady evolution of economic reforms culminating in it emerging as the leading regional hub for numerous economic activities, including financial services, trade and aviation.
Qatar’s ranking experienced a further slide, this time by two notches and securing the 32nd spot. The country lost three notches in the earlier report, ostensibly having to do with stronger state involvement in development projects as Qatar prepares to host the World Cup 2022.
Oman’s ranking was down eight positions, the biggest drop for any GCC economy on the Index and 56th worldwide. However, it possible to see a reversal in the ranking in the 2016 report as the country prepares to reduce public sector’s role. Planned measures entail lowering support for subsidized products in the local market, notably on petroleum products as part of efforts of streamlining the fiscal management.
Kuwait saw its position up by two notches, therefore securing the 76th place. It had dropped 10 spots a year ago. Saudi Arabia maintained its 77th ranking among the 178 economies ranked in the report.
Subjectively, the Index of Economic Freedom continues to regard Oman, Kuwait and Saudi Arabia as moderately free economies. In reality, GCC economies are exceptionally free by international standards, as evidenced by the presence of workers from all over the world.