The U.S. fell several spots to seventeenth place in the 2020 Economic Freedom Index compiled by conservative-leaning think tank the Heritage Foundation.
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The U.S. ranked twelfth in the 2019 index but was surpassed by countries including Chile and the Netherlands in 2020. Singapore, Hong Kong and New Zealand ranked first, second and third this year.
The index authors look at factors including government spending, judicial effectiveness and business freedom to make the rankings.
The U.S.'s ranking fell because of its trade freedom score, the report said.
"Approval of the recently renegotiated NAFTA (now the United States–Mexico–Canada Agreement) should help to ensure continued growth, and resolution of the U.S.–China trade dispute could boost trade freedom," the index authors wrote.
Heritage released the report as many of the countries it profiles, including Italy (74), China (103) and Spain (58), battle the coronavirus pandemic, a black swan event that's testing many countries' economies and governments.
"The world is watching how countries across the economic freedom spectrum respond to the coronavirus pandemic."
"The world is watching how countries across the economic freedom spectrum respond to the coronavirus pandemic," the index authors told FOX Business in a statement. "The Index of Economic Freedom's findings shed light on the policy responses that have brought about more prosperous economies, better health care, an abundance of food and clean water, and a higher quality of life."
"If the Index teaches us anything, it's that responses to the pandemic should be targeted and temporary, and not exploit the crisis to pursue pet policy priorities that needlessly expand the power of government," they continued.
The authors also concluded that economic freedom has risen in a majority of economies over the past year and recorded a global average economic freedom score of 61.6, the highest ever recorded in the index's 26 years.