Weighted largely by taxation and local government regulation, Texas and South Dakota have tied for the highest level of economic freedom among all US states, according to a new report released today by the Fraser Institute, an independent Canadian public policy think-tank. Vermont finished just above Maine, which was last in the ranking.
"In Texas and South Dakota, high levels of economic freedom help create prosperity and economic growth for working families," said Dean Stansel, economics professor at Florida Gulf Coast University and co-author of this year's Economic Freedom of North America report.
| Figure 1.1: Summary of 2012 Ratings at the World-Adjusted All-Government Level | ||
| Score | Rank | |
| Alberta, CA | 8.2 | 1 |
| Saskatchewan, CA | 8.0 | 2 |
| Newfoundland, CA | 7.7 | 3T |
| Texas, US | 7.7 | 3T |
| British Columbia, CA | 7.7 | 3T |
| New Hampshire, US | 7.6 | 6T |
| Oregon, US | 7.6 | 6T |
| Nebraska, US | 7.6 | 6T |
| Wyoming, US | 7.6 | 6T |
| Louisiana, US | 7.6 | 6T |
| Delaware, US | 7.6 | 6T |
| Utah, US | 7.6 | 6T |
| Ontario, CA | 7.6 | 6T |
| Nevada, US | 7.6 | 6T |
| North Carolina, US | 7.6 | 6T |
| Alaska, US | 7.6 | 6T |
| Oklahoma, US | 7.6 | 6T |
| South Dakota, US | 7.5 | 18T |
| Georgia, US | 7.5 | 18T |
| Colorado, US | 7.5 | 18T |
| Iowa, US | 7.5 | 18T |
| North Dakota, US | 7.5 | 18T |
| Illinois, US | 7.5 | 18T |
| Washington, US | 7.5 | 18T |
| Indiana, US | 7.5 | 18T |
| Tennessee, US | 7.5 | 18T |
| Quebec, CA | 7.5 | 18T |
| Manitoba, CA | 7.5 | 18T |
| Virginia, US | 7.5 | 18T |
| Minnesota, US | 7.4 | 30T |
| California, US | 7.4 | 30T |
| Kansas, US | 7.4 | 30T |
| Massachusetts, US | 7.4 | 30T |
| New York, US | 7.4 | 30T |
| Idaho, US | 7.4 | 30T |
| Michigan, US | 7.4 | 30T |
| Wisconsin, US | 7.4 | 30T |
| Alabama, US | 7.4 | 30T |
| Arkansas, US | 7.4 | 30T |
| Missouri, US | 7.4 | 30T |
| Ohio, US | 7.4 | 30T |
| Pennsylvania, US | 7.4 | 30T |
| Maryland, US | 7.4 | 30T |
| Montana, US | 7.4 | 30T |
| Connecticut, US | 7.4 | 30T |
| South Carolina, US | 7.4 | 30T |
| Arizona, US | 7.4 | 30T |
| Coahuila de Zaragoza, MX | 7.4 | 30T |
| New Jersey, US | 7.4 | 30T |
| Florida, US | 7.4 | 30T |
| New Brunswick, CA | 7.4 | 30T |
| West Virginia, US | 7.3 | 52T |
| Hawaii, US | 7.3 | 52T |
| New Mexico, US | 7.3 | 52T |
| Kentucky, US | 7.3 | 52T |
| Vermont, US | 7.3 | 52T |
| Rhode Island, US | 7.3 | 52T |
| Nova Scotia, CA | 7.3 | 52T |
| Guanajuato, MX | 7.2 | 59T |
| Maine, US | 7.2 | 59T |
| Quintana Roo, MX | 7.2 | 59T |
| Mississippi, US | 7.2 | 59T |
| Querétaro, MX | 7.2 | 59T |
| Morelos, MX | 7.2 | 59T |
| Sonora, MX | 7.1 | 65T |
| Jalisco, MX | 7.1 | 65T |
| Durango, MX | 7.1 | 65T |
| San Luis Potosí, MX | 7.1 | 65T |
| Yucatán, MX | 7.1 | 65T |
| Baja California Sur, MX | 7.1 | 65T |
| Puebla, MX | 7.1 | 65T |
| Baja California, MX | 7.1 | 65T |
| México, MX | 7.1 | 65T |
| Prince Edward Island, CA | 7.1 | 65T |
| Sinaloa, MX | 7.0 | 75T |
| Aguascalientes, MX | 7.0 | 75T |
| Tlaxcala, MX | 7.0 | 75T |
| Hidalgo, MX | 7.0 | 75T |
| Zacatecas, MX | 7.0 | 75T |
| Nuevo León, MX | 7.0 | 75T |
| Guerrero, MX | 6.9 | 81T |
| Nayarit, MX | 6.9 | 81T |
| Chihuahua, MX | 6.9 | 81T |
| Michoacán de Ocampo, MX | 6.8 | 84T |
| Campeche, MX | 6.8 | 84T |
| Oaxaca, MX | 6.8 | 84T |
| Tabasco, MX | 6.8 | 84T |
| Veracruz de Ignacio de la Llave, MX | 6.7 | 88 |
| Tamaulipas, MX | 6.5 | 89 |
| Chiapas, MX | 6.3 | 90 |
| Distrito Federal, MX | 6.1 | 91T |
| Colima, MX | 6.1 | 91T |
The report ranks jurisdictions based on their levels of economic freedom (measured by size of government, taxation and labor market restrictions) using data from 2012, the most recent year of available data.
The report's American-only ranking system spotlights state and local government policy, comparing US states to US states.
Following Texas and South Dakota, the top ranked U.S. states are North Dakota, Virginia, New Hampshire, Louisiana, Nebraska, Delaware and Tennessee.
Maine is the least free state, followed by Vermont, Mississippi, New York, Rhode Island, West Virginia, New Jersey and California.
The report also has an all-government ranking system, which includes the 50 U.S. states, 32 Mexican states and 10 Canadian provinces. Overall, Canadian provinces Alberta and Saskatchewan rank first and second, with Texas tied for third alongside Canadian provinces Newfoundland and Labrador, and British Columbia.
"The freest economies operate with minimal government interference, relying on personal choice and markets to decide what's produced, how it's produced and how much is produced. As government imposes restrictions on these choices, there's less economic freedom," Stansel said.
In the most-free states, the average per-capita GDP in 2012 was roughly $55,000 compared to roughly $48,000 for the least-free states.
"The link between economic freedom and prosperity is clear - states that support low taxation, limited government and flexible labor markets see greater economic growth while states with lower levels of economic freedom see lower living standards and less economic opportunity," said Fred McMahon, study co-author and Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute.
The Economic Freedom of North America report is an offshoot of the Fraser Institute's Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates. See the complete study at www.freetheworld.com
TORONTO, ONTARIO--(Marketwired - December 02, 2014) - Fraser Institute: The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit fraserinstitute.org