Economic Freedom rank needs discussion: Perng
By Lauly Li, Special to The China PostTAIPEI, Taiwan -- Central bank Governor Perng Fai-nan (彭淮南) yesterday blamed subjective research methods and evaluation standards for Taiwan's ranking in the 2013 Index of Economic Freedom.
February 1, 2013, 1:01 am TWN
The 2013 index result, released in February by the Heritage Foundation and the Wall Street Journal, ranked Taiwan 20th among 185 economies, down from 18th last year. Taiwan's overall score, on the contrary, rose 0.8 points to 75.2 from the previous year.
The Council for Economic Planning and Development (CEPD) reviewed Taiwan's 2013 index ranking yesterday at the Executive Yuan. The council said although Taiwan's place has dropped, the country's score has increased annually over the past four years.
CEPD official Wu Ming-chi (吳明機) said the Index of Economic Freedom is not the only gauge for measuring the government's financial policymaking efforts.
During the Cabinet meeting, Perng said there are many dimensions of the index results that are not completely objective, such as the issues of monetary inflation, financial liberalization and limitations set on foreign financial institutions.
Perng said in the report Taiwan was ranked 13th in terms of inflation, with a rate of 1.4 percent, while Japan is ranked No. 1 due to its negative inflation rate of minus 0.4 percent.
Perng asked that if inflation dictates a nation's rank, then why has Japanese Prime Minister Shinzo Abe set a target inflation rate of 2 percent, a move not in accordance with current economic theories.
The research undertaken to create the index did not take the particulars of every nation's economic condition into account, he said.
In the 2013 report, Taiwan received 50 points and a ranking of 69th regarding financial liberalization. Perng said the research was done by questionnaire; a method which he said introduces the risk of subjectivity.
Perng went on to say that the report said Taiwan has set limitations to foreign financial institutions, which Perng said is wrong. Perng then explained that the U.S. financial firms have enjoyed more benefits in Taiwan than Taiwan's financial institutions have in the U.S.
Premier Sean Chen said the government has been working on improving the economic environment over the past four years.
The government can refer to international financial evaluations like the Index of Economic Freedom when drawing up financial policies; however, the evaluation standards of such reports do not always fit Taiwan's economic circumstances.