Combining fiscal restraint, economic liberty, sustained growth, and safety
| # | Country | Economic Freedom (Heritage Index) |
Govt. Spending (% of GDP) |
Avg. GDP Growth (~20 yr, approx.) |
Safety / Stability | Key Mechanisms Keeping Government Small |
|---|---|---|---|---|---|---|
| 1 | 🇸🇬Singapore | 82+ (Top 1) | ~17–18% | ~4.5% | Extremely low crime; no terrorism/war; political stability | Central Provident Fund (CPF): Mandatory private savings accounts replace state pensions, unemployment benefits, and healthcare provision. Medisave forces individual health savings. HDB self-financing public housing. No minimum wage. No universal welfare. Government invests surpluses via sovereign wealth funds (GIC, Temasek). |
| 2 | 🇭🇰Hong Kong | 79+ (Top 5 historically) | ~20–22% | ~3.5% | Very low violent crime; stable (post-2020 political controls reduced unrest) | Basic Law Art. 107: Budget must be commensurate with revenue (balanced budget requirement). Territorial tax system (no tax on foreign income). No capital gains or dividend taxes. MPF mandatory private retirement scheme. Minimal public healthcare (long wait times deter overuse). No universal basic income. |
| 3 | 🇨🇭Switzerland | 80+ (Top 5) | ~33–34% | ~1.7% | Near-zero crime/terrorism; armed neutrality; no war in 200+ years | Constitutional Debt Brake (2003): Structural deficit capped; surpluses in good years fund deficits in bad years. Fiscal federalism: 26 cantons compete on tax rates, forcing efficiency. Direct democracy: Citizens vote on all major spending/tax changes via referendum. Mandatory private health insurance (not state-provided). Armed neutrality eliminates defense escalation. |
| 4 | 🇦🇪UAE | 70+ (Top 25) | ~27–30% | ~4.0% | Extremely low crime; no terrorism; US security umbrella | No federal income tax (only 5% VAT and corporate tax on large profits since 2023). Expat-majority model: 80%+ population are temporary workers with employer-provided healthcare/housing/pensions — no state obligation. Free zones (DIFC, JAFZA) operate under separate light-touch regulatory/tax frameworks. Sovereign wealth (ADIA, Mubadala) saves oil revenues rather than spending them. |
| 5 | 🇲🇴Macau | 70+ (Top 30) | ~13–16% | ~7%+ (gaming boom era) | Very low crime; politically stable under Chinese sovereignty | Gaming concession taxes fund ~80% of government revenue — no income tax needed for most residents. Tiny territory requires minimal infrastructure. No military spending (garrisoned by PLA at China's cost). No welfare state; no universal healthcare. Government functions are extremely limited in scope due to small population (~680K). |
| 6 | 🇶🇦Qatar | 72+ (Top 25) | ~25–28% | ~4.5% | Extremely low crime; no terrorism; highly stable autocracy | No income tax. Hydrocarbon revenues (LNG) fund state without taxing citizens. Expat workforce model: ~85% population are foreign workers with employer-provided benefits (no state obligation). Qatar Investment Authority invests surplus revenues abroad rather than expanding domestic spending. Minimal welfare state (benefits limited to ~300K citizens). |
| 7 | 🇨🇱Chile | 76+ (Top 20) | ~25–28% | ~3.5% | Low terrorism; moderate crime (recently rising); no war risk | AFP privatized pension system (1981): Individual capitalization accounts replace pay-as-you-go state pensions. Structural balance rule: Government spending tied to long-run copper price, not current revenue booms. ISAPREs: Private health insurance option alongside underfunded public system. Economic Stabilization Fund saves copper surplus revenues abroad. |
| 8 | 🇲🇺Mauritius | 74+ (Top 25) | ~27–30% | ~4.0% | Very low crime for Africa; politically stable democracy; no terrorism/war | Flat tax (15%): Simple, low-rate system applied uniformly to individuals and corporations. Export Processing Zones (1980s): Created parallel deregulated economy that outcompeted state sector. Privatization of SOEs in 1980s–90s reduced state footprint. Financial services sector (offshore banking) operates under light-touch regulation. No conscription; minimal military. |
| 9 | 🇰🇷South Korea | 74+ (Top 30) | ~30–33% | ~3.5% | Low crime; no terrorism; US alliance deters war (DMZ tension managed) | Thin welfare state: National pension provides minimal replacement rates (~30% for average worker). National Health Insurance has high co-payments (40–60%) deterring overuse. Post-1997 privatization wave: Major SOEs (POSCO, KT, KEPCO subsidiary) sold to private sector. Chaebol model: Large conglomerates internalize R&D, training, housing — functions that elsewhere fall to government. |
| 10 | 🇵🇦Panama | 66+ (Top 50) | ~25–28% | ~5.0% | Moderate crime (low vs. Latin America); no military; no terrorism/war | Fully dollarized economy (since 1904): No central bank means no monetary financing of deficits; government cannot print money to fund spending. Territorial tax system: Only domestically-sourced income is taxed. Fiscal Responsibility Law (2008): Caps deficit at 1% of GDP (with few exceptions). Colón Free Zone and Canal revenue generate government income without broad-based taxation. No standing army since 1990. |