"Governments around the world embraced heavy-handed regulation and extensive spending in response to the US and European debt crises, reducing economic freedom in the short term and prosperity over the long term," the report noted.
"But the slight increase in this year's worldwide economic freedom score is encouraging. Impressively, all five continents are represented in the global top 10," it added.
The report noted that on an average, the poorest 10 per cent of people in the freest nations are nearly twice as rich as the average population of the least free countries.
Interestingly, the US, which is considered a champion of economic freedom among large industrial nations, continues its protracted decline in the global rankings. This year, the US plunged to its lowest-ever ranking of 18th, after being ranked at as high as second position in 2002.
The decline is attributed to higher spending and borrowing on the part of the US government.
The rankings and scores of other major economies include -Japan (20th), Germany (31st), Korea (37th), France (47th), Italy (83rd), Mexico (91st), Russia (95th) and Brazil (105th).
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