Pakistan’s economy is 56.8 percent free which makes it the 93rd freest economy in the world in 2008. According to Index of Economic Freedom, the country’s ranking has worsened over the last two years.

First of all, one needs to look at how this index is computed and what does it explain. After that, the reason for Pakistan’s slide in economic freedom needs to be discussed.

The index is simple average of 10 individual freedoms, each one of which is important for individual as well as for national prosperity. These ten freedoms are: business freedom (ability to create, operate and close an enterprise quickly), trade freedom (absence of tariff and non-tariff barrier), fiscal freedom ( burden on government from revenue side), government size (government expenditure), monetary freedom ( measures for price stability and price control), Investment freedom (free flow of capital, especially foreign capital), financial freedom (measures for banking security and independence), property rights (an assessment of the ability of individuals to accumulate private property) , freedom from corruption (quantitative data based assessment of the perception of corruption in the business environment, including levels of governmental legal, judicial ,and administrative corruption) and labour freedom (ability of workers and businesses to inter-act without any state restriction).

Each one of the 10 freedoms is graded using a 0 to 100 scale, where 100 represent the maximum freedom. A score of 100 signifies an economic environment or set of policies that is most conducive to economic freedom

Pakistan overall freedom index score is 56.8 reflecting that it lies in the category of the counters which are mostly unfree along with other 57 economies. Its overall score is 1.7 percentage points lower than last year, reflecting worsened scores in six of the 10 economic freedoms. Pakistan is ranked 16th out of 30 countries in the Asia–Pacific region, and its overall score is slightly below the regional average.

The table shows the performance in case of individual freedoms. Pakistan’s scores on business freedom, fiscal freedom, labour freedom, government’s size and in monetary freedom are quite reasonable. Freedom from the corruption is the variable which contributed least towards the overall economic freedom score and its value is most unstable and showing declining trend. Corruption is perceived as pervasive. Pakistan ranks 142nd out of 163 countries in Transparency International’s Corruption Perceptions Index for 2006. Corruption among executive and legislative branch officials is viewed as widespread.

The comparison with India and China shows that overall Pakistan freedom score is the highest among three. Pakistan is leading with regard to four freedoms namely business, fiscal, government size and labour freedom. India is leading in property rights freedom. In trade and monetary freedoms, China is ahead of the rest two. For Pakistan, there is a need to improve the freedom from corruption score but in current circumstances it seems difficult because of political unrest and judicial issues.