The level of economic freedom in the world dipped slightly in 2009 according to the 16th annual Index of Economic Freedom, released by The Heritage Foundation and The Wall Street Journal. One reason: To help ward off recession, many governments launched unsuccessful attempts to spend their way to prosperity.

The average economic freedom score for the 2010 Index is 59.4 (on a scale in which 100 represents the ideal), down 0.1 point from 2009. This is only the second time in the history of the Index that average scores for countries measured in successive years have declined.

"Our confidence in economic freedom is being tested," notes Heritage President Edwin Feulner in the book's preface. Indeed, led by the United States, governments in many developed countries stepped up spending aimed at promoting growth and employment. Yet, "the early evidence is that such spending did not work," the Index editors write.

Hong Kong and Singapore finished 1st and 2nd in the rankings for the 16th straight year. With Australia in 3rd place and New Zealand moving up to number 4, the Asia-Pacific region boasts a clean sweep at the top.

Europe registered three top 10 placements: Ireland, Denmark and Switzerland. As a cautionary tale about the dangers of government intervention, the United Kingdom dropped out of the top 10 for the first time in Index history. The United States also dropped significantly, to 8th place. Both countries increased government spending, and each lost more than 2.0 points on its Index score.

A number of European economies did well last year. Montenegro improved the most, gaining 5.4 points on the economic freedom scale. Other European countries that posted freedom gains included Macedonia, Croatia, Belarus, Bosnia and Herzegovina, and Poland.

Latin America, on the other hand, fared poorly. Five Latin American or Caribbean countries, including Bolivia, Barbados, Ecuador, the Bahamas and Venezuela, lost significant amounts of economic freedom in 2009.

There's a lesson in the 2010 Index: The global recession did less damage in countries that moved to a higher category of economic freedom and was worse in countries that moved lower. Overall 15 countries changed categories of economic freedom in this year's Index, including the U.S., dropping from "free" to "mostly free."

Overview

"Regrettably, attacks on the free market, fueled by the economic slowdown and the political appeal of quick interventionist remedies, gained strong momentum in some countries, with far-reaching effects," the Index editors write. "Exactly half of the major economies curtailed economic freedom to some degree through various interventionist measures. Perhaps more significant for the long-term progress of economic freedom, the other half did not."

The Most Free

Hong Kong (1st)

Singapore (2nd)

Australia (3rd)

New Zealand (4th)

Ireland (5th)

Switzerland (6th)

Canada (7th)

United States (8th)

Denmark (9th)

Chile (10th)

The Least Free

Solomon Islands (170th)

Turkmenistan (171st)

D.R. of Congo (172nf)

Libya (173rd)

Venezuela (174th)

Burma (175th)

Eritrea (176th)

Cuba (177th)

Zimbabwe (178th)

North Korea (179th)