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N. Korea ranked worst in economic freedom among 179 countries: survey

All Headlines 01:52 January 13, 2011

By Hwang Doo-hyong

WASHINGTON, Jan. 12 (Yonhap) -- North Korea has the least economic freedom in the world with the ruling communist party controlling every aspect of economic activities in the isolated, impoverished country, a survey showed Wednesday.

The joint survey by The Heritage Foundation and The Wall Street Journal also said South Korea is the 35th freest economy among 179 countries surveyed, citing lingering corruption and costly dismissal of employees despite its economic dynamism which successfully helped the world's 13th biggest economy weather the global recession in the past years.

Hong Kong and Singapore finished first and second for the 17th straight year in the 2011 Index of Economic Freedom rankings. Australia came third, followed by New Zealand, Switzerland, Canada, Ireland, Denmark and the United States.

The index evaluates openness, the rule of law and competitiveness.

"North Korea remains an unreformed Communist state," the report said. "It has experimented with a few market reforms but mainly adheres to a system of centralized planning and state command and control of the economy. The Communist Party controls every aspect of economic activity. The impoverished population is heavily dependent on food rations and government subsidies in housing, and the state-run rationing system has deteriorated significantly. Deprivation is widespread."

North Korea may be attempting to open its economy by encouraging limited foreign direct investment, the report said. "But the dominant military establishment and ongoing leadership change make any significant near-term change unlikely."

On South Korea, the report said that its "dynamic economy successfully weathered the global economic slowdown and demonstrated a considerable level of resilience."

The report cited South Korea's move to sign free-trade deals with the United States, the European Union and several other countries, and "a vibrant private sector."

"Innovation is supported by the country's openness to global commerce and its sound regulatory framework," it said. "The financial sector has also become progressively more open and transparent."

The report also took note of the labor market flexibility and corruption.

"South Korea's labor market is dynamic, but there are lingering regulatory burdens," it said. "The non-salary cost of employing a worker is moderate, but dismissing an employee is costly. Regulations on work hours are inflexible. Corruption is perceived as present. Corruption is fostered by non-transparent rulemaking; exclusionary social, political, and business structures; and insufficient institutional checks and balances."

hdh@yna.co.kr

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