The Heritage Foundation’s 2010 rankings, using information in the year to end-June 2009, measure the degree of economic freedom of 179 world economies by assessing, for example, their business, trade and fiscal freedom, government spending, investment freedom, and property rights.

It finds, for example, that overall fiscal freedom improved by 0.5 points over the year. The average top tax rate on individual income is now 29.3%, and the average top tax rate on corporate income is 25.1%. The average total tax burden as a percentage of GDP is 23.2%. Since July 2008, it says, 32 countries have introduced reforms in direct taxes or have implemented tax cuts as previously planned, despite the challenging economic and political environment caused by the global economic slowdown.

However, it continues, many of the countries whose scores have dropped have responded to the economic crisis with policy moves that reduce economic freedom. In the US, policies or proposals have included more intrusive regulations, government takeovers of businesses, government subsidies, tax increases, and protectionist measures to reduce trade. Consequently, the US has dropped two places in the ranking to eighth, behind Canada. For much the same reasons, the UK is now out of the top 10 in eleventh place.

Hong Kong maintains its position as the world’s freest economy, a distinction it has enjoyed for 16 consecutive years. Singapore remains close, ranked as the world’s second freest economy. Australia and New Zealand, ranked 3rd and 4th this year, have solidified their position at the top of the rankings.

Hong Kong’s government said that the Heritage Foundation has recognized Hong Kong's competitive tax regime, respect for property rights and flexible labor market, coupled with an educated and highly motivated workforce; and has complimented Hong Kong as one of the world's leading financial and business centers. Hong Kong has also maintained its status as Asia's second-largest destination for foreign direct investment.