219

How Do We Measure Economic Freedom?

See page 471 for an explanation of the methodology
or visit the Index Web site at heritage.org/index.
2012 data unless otherwise noted.
Data compiled as of September 2013.
Quick Facts
Population: 11.3 million
GDP (PPP): $276.9 billion
6.4% growth in 2012
5-year compound annual growth 4.4%
$24,505 per capita
Unemployment: 24.2%
Ination (CPI): 1.0%
FDI Inow: $2.9 billion
Public Debt: 158.5% of GDP
Economic Freedom Score
Least Most
free free
50
25 75
0 100
0 20 40 60 80 100
Country Comparisons
Freedom Trend
Country
World
Average
Regional
Average
Free
Economies
2010 2011 2012 2014 2013
52
54
56
58
60
62
64
66
55.7
60.3
67.1
84.1
55.7
GREECE
World Rank: 119 Regional Rank: 40
G
reeces economic freedom score is 55.7, making its economy
the 119th freest in the 2014 Index. Its score is only slightly
better than last year, with improvements in labor freedom and
monetary freedom almost completely offset by deteriorations
in investment freedom, the control of government spending,
business freedom, and freedom from corruption. Greece is
ranked 40th out of 43 countries in the Europe region, and its
overall score is below the world and regional averages.
Over the 20-year history of the Index, Greeces economic free-
dom score has declined by over 5 points. Despite improve-
ments in five of the 10 economic freedoms, large declines in
property rights, freedom from corruption, government spend-
ing, and investment freedom have more than offset any gains.
Greece has fluctuated between the ranks of the moderately
free and the mostly unfree throughout the history of the
Index. It achieved its highest level of economic freedom in
2010, but its scores have plummeted dramatically since then.
Major fiscal weaknesses aggravated by the debt and unem-
ployment crises have not been sufficiently addressed, and the
relatively poor economic performance associated with levels
of economic freedom that are significantly below other mem-
bers of the EU has led to a loss of competitiveness and even to
political volatility.
BACKGROUND: Greece joined NATO in 1952 and the Euro-
pean Union in 1981. It adopted the euro in 2002. To confront
a sovereign debt crisis in 2010, the European Central Bank
and the International Monetary Fund provided emergency
loans in exchange for necessary but long-delayed austerity
measures. A year later, after a series of violent protests, the
government collapsed. A caretaker government was formed in
November 2011. When elections in May 2012 failed to produce
a government, new elections in June 2012 led to formation of
a pro-Euro coalition led by the center-right New Democracy
party along with the center-left Pan-Hellenic Socialist Move-
ment and the Democratic Left Party. Greeces economy, which
depends heavily on shipping, tourism, and services, has con-
tracted for 19 straight quarters.
220 2014 Index of Economic Freedom
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Business Freedom
Labor Freedom
Monetary Freedom
RCUlATCRY
ffICINCY
CPN
MARkTS
Trade Freedom
Investment Freedom
Financial Freedom
CCVRNMNT
SIZ
Fiscal Freedom
Government Spending
RUl Cf
lAW
Property Rights
Freedom from Corruption
O 2O 4O 5O 3O OO
O 2O 4O 5O 3O OO
O 2O 4O 5O 3O OO
O 2O 4O 5O 3O OO
Country World Average Rank Change
1Year
Score
RUl Cf lAW
CCVRNMNT
SIZ
RCUlATCRY
ffICINCY
CPN MARkTS
30.0
l6.8
+3.4
36.l
+5.8
2.2
+ll.0
+5.0
l0.0
+20.0
70th
89th
153rd
172nd
45th
121st
79th
56th
80th
69th
40.0
33.2
65.9
l9.2
75.8
53.9
76.3
82.8
60.0
50.0
0
0.S
0.3
.
l.3
-ll.S
-2.9
-l.0
.0
0
Long-Term Score Change (since 1995)
THE TEN ECONOMIC FREEDOMS
Corruption remains a problem in Greece. In April 2012, a former minister of defense was
charged with taking millions of euros in bribes from European armaments manufacturers.
An October 2012 press report detailed extensive tax evasion by wealthy Greek citizens. The
judiciary is independent, and the constitution provides for public trials. Protection of property
rights is not strongly enforced.
The process for launching a company is fairly streamlined and takes only five procedures, but
licensing requirements remain burdensome and time-consuming. With high non-salary costs
to employ a worker and rigid restrictions on work hours, the labor market remains stagnant.
Monetary stability is weak, and Greece is receiving substantial subsidies from the European
Union.
EU members have a low 1.1 percent average tariff rate and, in general, few non-tariff barriers to
trade. Greeces government procurement policies sometimes favor domestic companies. Eco-
nomic uncertainty continues to deter foreign investment. The overall stability of the financial
system has been severely undermined, and the banking sector continues to be under strain.
The top individual income tax rate has been reduced to 42 percent, and the top corporate tax
rate is 26 percent. Other taxes include a value-added tax (VAT) and a real estate tax. The over-
all tax burden is nearly 31.2 percent of GDP. Public spending has stabilized at 52 percent of
the domestic economy. Economic recession continues to put pressure on public accounts, and
public debt remains over 150 percent of GDP.
GREECE
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continued
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