Croatia moved up 24 places at the Index of Economic Freedom published every year by the Washington-based Heritage Foundation and the Wall Street Journal. Croatia’s economic freedom score is 59.2, making its economy the 92nd freest in the 2010 Index and just below this year’s global average of 59.4.

Its overall score is 4.1 points higher than last year, reflecting significantly improved scores for government spending, investment freedom, and protection of property rights. Croatia has moved up 24 places in the world rankings and from 38th to 37th out of 43 countries in the Europe region; its overall score is still below the regional and world averages.

Croatia has made notable improvements that have affected its overall economic freedom score and scores above the world average in trade freedom, investment freedom, and monetary freedom. Management of public finance has been enhanced, and regulation is more streamlined. Croatia has also created a more competitive financial system by implementing efficient regulatory frameworks and privatization.

Croatia’s overall weakness stems from excessive government interference that erodes the economy’s efficiency and flexibility. In addition to high levels of government spending, government intervention in other key areas of the economy is considerable. Burdensome and non-transparent administrative regulations, particularly at the local level, continue to challenge entrepreneurs, resulting in lower levels of productivity and job growth. Corruption and political interference, especially with regard to the judiciary, also restrict economic freedom.

The 2010 Index covers 183 countries, ranking 179 of them with an economic freedom score based on 10 measures of economic openness, regulatory efficiency, rule of law, and competitiveness. The basic principles of economic freedom emphasized in the Index are individual empowerment, equitable treatment, and the promotion of competition.