Israel's economy is 66.1 percent free, according to our 2008 assessment, which makes it the world's 46th freest economy. Its overall score is 1.5 percentage points higher than last year, reflecting improved scores in investment freedom and financial freedom. Israel is ranked 4th out of 17 countries in the Middle East/North Africa region, and its overall score is much higher than the regional average.
Israel enjoys high levels of trade freedom, investment freedom, property rights, and freedom from corruption. The economy is open to foreign investment in almost all sectors except defense. Tariff rates are low. Inflation is low, although the government interferes with the market by subsidizing certain basic goods.
Israel is weak in two areas: government size and fiscal freedom. Government spending is high, constituting almost half of GDP. Income tax rates on individuals and corporations are also relatively high, as is total tax revenue. Although relatively advanced for the region, Israel's financial sector is still subject to government intervention and control.

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