Bahrain continues to be the Middle East and North Africa (Mena) region leader for financial, investment and trade freedom according to a new report.

The 2023 Index of Economic Freedom published by Heritage Foundation has given the kingdom an economic freedom score of 62.5 (out of 100), an improvement of 0.5 from last year.

The score places Bahrain’s economy as the 68th freest out of 184 countries.

For the second year in a row, Bahrain has ranked first in the Mena for financial, investment and trade freedom on the index, which focuses on four key aspects of economic and entrepreneurial environment that governments typically control, namely rule of law, government size, regulatory efficiency and market openness.

In assessing conditions across these four categories, the index measures 12 specific components of economic freedom, each of which is graded on a scale from 0 to 100.

Scores on these 12 components of economic freedom are calculated from a number of sub-variables and then equally weighted and averaged to produce an overall economic freedom score for each economy.

This year’s edition of the report highlights Bahrain’s credentials as a financial hub for dynamic economic activity and openness to global commerce, sustained by a competitive and efficient regulatory environment.

Additionally, the findings revealed the kingdom’s overall investment framework to be positive and transparent, with equal treatment to both local and foreign investors.

Bahrain is ranked fourth among 14 countries in the Mena region, and its overall score surpasses the regional and world averages of 56.8 and 59.3 respectively.

The report says that Bahrain is becoming more open and transparent, noting that the country “performs quite well in many of the four pillars of economic freedom.”

The kingdom’s openness to global commerce is sustained by a competitive and efficient regulatory environment.

The overall regulatory framework is more streamlined and competitive, and the commercial law system is relatively straightforward.

The report explains that an accessible and efficiently functioning formal financial system ensures the availability of diversified savings, credit, payment, and investment services to individuals and businesses.

As for the investment environment, it says that a free and open system provides maximum entrepreneurial opportunities and incentives for expanded economic activity, greater productivity and job creation.

The benefits of such an environment flow not only to the individual companies that take the entrepreneurial risk in expectation of greater return, but also to society as a whole, the report adds.

The Bahrain Economic Development Board (EDB), the national investment promotion agency, has appreciated the kingdom’s high rank in the index.

“Bahrain’s high ranking is a reflection of the government’s success in maintaining a progressive regulatory framework that offers high yielding opportunities for investors owing to a favourable tax environment, ease of doing business, and unparalleled access to the $2.07 trillion GCC market and beyond,” said EDB chief of strategy Nada Al Saeed.

“Alongside a highly skilled workforce, maintaining this liberal economic environment is a key differentiator in Bahrain’s value proposition as we continue to be guided by the national Economic Recovery Plan and work towards attracting additional investment into the kingdom.”

As part of a strategic national vision, which has successfully launched multiple projects, the national Economic Recovery Plan (ERP) aims to enhance Bahrain’s long-term competitiveness and achieve fiscal balance by 2024.

A key deliverable under the ERP is to create quality jobs and training opportunities for Bahrainis and attract Foreign Direct Investments (FDI) worth more than $2.5bn by 2023 across key sectors.

For 29 years, the Index of Economic Freedom has measured the impact of liberty and free markets around the globe in measuring a nation’s true capacity for lasting growth and prosperity, as per the Heritage Foundation.

Economic freedom is the fundamental right of every human to control his or her own labour and property, it adds.

“In an economically free society, individuals are free to work, produce, consume and invest in any way they please. In economically free societies, governments allow labour, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself,” says the report.

The Heritage Foundation is an American conservative think-tank based in Washington, D.C. that is primarily geared towards public policy.

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