RESULTS BY SUB-INDICES
The tables may be interpreted both from top to down and from bottom to up. In the first approach economies are ranked from right to left, in the second – from left to right. Higher place of a country in the table means that its economy contains more rightness (self-regulation) and less leftness (governmental regulation). The countries with GDP per capita over 35 thousand international dollars are in colored boxes.
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Public Finance Sub-Index
Table 1. Public Finance Sub-Indices – 2016
Scale 1. Leftness-Rightness of Economies by Public Finance Sub-Index (2016)
By Public Finance Sub-Index Singapore’s economy (0.187) is the rightest one, and economy of Argentina (0.738) is the leftest one among all considered. Azerbaijan (0.392) is not far from the relative center point (0.369). The closeness of the relative center and median (0.364 – Romania) indicates the approximate numerical equality of the countries on both sides of the relative center.
Both economically developed and developing countries are almost equally distributed to the right and left from the relative center. It leads to the conclusion that there is no strict interdependence between the Public Finance Sub-Index and economic development. In other words, the degree of government intervention in the economy on this parameter is not conditioned by the level of national economic development and is not a condition for it.
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Price Regulation Sub-Index
Table 2. Price Regulation Sub-Indices – 2016
Scale 2. Leftness-Rightness of Economies by Price Regulation Sub-Index (2016)
By Price Regulation Sub-Index Switzerland’s economy (0.063) is the rightest one among the analyzed and Indian economy (0.378) is the leftest. Azerbaijan’s economy (0.325) is the fourth closest to the extreme left point.
The relative center is shifted from the geometric center to zero and this indicates that by this sub-index the countries tend to the rightness. It, however, does not mean that the economies, which are located between the geometric center and the zero, are categorically right-wing economies by this sub-index. In accordance with the theoretical interpretation of IL(R)E, the results obtained on a particular sub-index (as well as the integral index) allow to evaluate (measure) the leftness-rightness of economies only comparatively to each other.
The price regulation models preferred by developed and developing countries vary considerably. In economically developed countries, prices tend to be more liberal, i.e. governments intervene in the pricing in a lesser extent.
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Foreign Trade Sub-Index
Table 3. Foreign Trade Sub-Indeces – 2016
Scale 3. Leftness-Rightness of Economies by Foreign Trade Sub-Index (2016)
Regarding regulation of foreign trade, Singapore’s is the most liberal economy (0.058), and Iranian economy (0.553) is the leftest. Among 95 countries, Azerbaijan (0.306) is the 23rd country on severity of the government regulation of foreign trade operations. The median (0.222 – Serbia) is righter than the relative center (0.244); in the majority of ranked countries foreign trade is more liberal than it’s expressed by the relative center.
If to compare with developing countries, the governments in economically developed countries usually less strictly regulate foreign trade. This is quite understandable: the majority of goods and services produced in the developed countries are competitive, and therefore their leaders and business communities are more interested in the liberalization of international trade. As for developing countries, they strive to protect their domestic markets harder, although the domestic market protection measures can stimulate economic development only under certain additional conditions.
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Table 4. Licensing Sub-Indeces – 2016
Scale 4. Leftness-Rightness of Economies by Licesing Sub-Index (2016)
By Licensing Sub-Index UAE's economy (0.023) is the rightest one, and Cambodia occupies the leftest point (0.357) among 95 economies under view. Azerbaijan’s economy (0.122) is located righter than 27 economies and lefter than 67, and to the left from relative center (0.099).
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Employment Regulation Sub-Index
Table 5. Employment Regulation Sub-Indices – 2016
Scale 5. Leftness-Rightness of Economies by Employment Regulation Sub-Index (2016)
Regarding regulation of labor relations between employer and employee Denmark (0.156) is the most liberal country, and the leftest economy belongs to Venezuela (0.804). A number of economically developed countries, including South Korea (0.473), Belgium (0.466), France (0.442), Australia (0.437), Germany (0.436) and Italy (0.433) attach higher importance to the protection of employees’ direct social rights and "in return" rather severely limit the freedom of companies. Some other rich countries, in particular, Singapore (0.165), Switzerland (0.169), the United States and Iceland (0.189 each), the United Arab Emirates (0.204), the United Kingdom and New Zealand (0.253 each), on the contrary, provide in this area extensive rights to businesses in cost of limiting the rights of workers.
On this sub-index, Azerbaijan (0.339) is number 33 among the liberal countries and its economy is to the right both from the center (0.376) and the median (0.387 – Norway).
Stochastic ranking of developed and developing economies suggests that “softness or stiffness” (within certain limits) of the state regulation of hiring and firing rules is not a condition for economic development and is not conditioned by it.
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Minimum Wage Sub-Index
Table 6. Minimum Wage Sub-Indices – 2016
Scale 6. Leftness-Rightness of Economies by Minimum Wage Sub-Index (2016)
In the United Arab Emirates the minimum wage level is regulated neither by law nor collective agreements. The Emir of Qatar has the authority to set a minimum wage, but currently it is not applied. These two states have the rightest economies (with an absolute indicator) among the analyzed 95 countries. When IL(R)E Reports for 2014 and 2015 were in progress, Singapore’s situation was identical. In January 2014, Singapore has officially established minimum wage for cleaner jobs in the amount of USD 1,000 per month. Since this group of workers is relatively small, Singapore is conditionally placed at the point "0.010".
In Uganda (0.031) and Bahrain (0.033) the MW sub-indices are also low. In Bahrain, Egypt and Saudi Arabia the minimum wage is set only for those employed in the public sector. When calculating the MW sub-indices for these countries, the share of employed in the public sector was also considered. Eight economies (Austria, Denmark, Finland, Iceland, Italy, Norway, Sweden and Switzerland) are conditionally placed at the 0.050 point. In these countries a minimum wage is not defined legislatively, but still governed by collective agreements. Sub-indices are conditional also for South Africa, Cambodia and Cyprus (0.080). In these countries a minimum wage is established legislatively, but for a limited categories of employees.
In a number of economies the minimum wage, even being enshrined in law by the state, is subject for collective agreements. In these cases the agreed minimum, as may be expected, exceeds the statutory which is regarded as a kind of minimum limit of the minimum wage. Since the leftness-rightness of economy is defined by government interference, and, to the same, statutory minimum expresses the final lower limit, then legally approved figure is used in this study.
As the right pole allowed to certain conventions, the analysis of the relative center and the median, in comparison with the previous cases, has a smaller value. But these conventions do not affect the leftness-rightness of economies in relation to each other. The economy of Azerbaijan (0.218) is located to the right from both the relative center (0.349) and the median (0.357 – Ghana).