What are some of the main factors for Singapore’s economic freedoms?

Singapore is catching up to Hong Kong in terms of economic freedom and could soon surpass the SAR. That was the message delivered at the Washington-based Heritage Foundation's 2008 Index of Economic Freedom. It shows Hong Kong's freedom decreasing and Singapore's increasing compared to last year's scores.

"The gap between Hong Kong and Singapore is shrinking," Heritage Foundation vice president Kim Holmes said. If the Singapore government lowers its amount of intervention in the banking industry, it "could very well end up giving Hong Kong a real competition," Holmes said.

Bank of East Asia chief economist Paul Tang Sai-on called the report "a wake-up call for Hong Kong."He added: "I think, for regulators as well as the SAR government, they should look into the report and see what areas we can further strengthen our lead."

Hong Kong was ranked first in the American think tank's ranking of economic freedom for the 14th year in a row. Singapore was second again. In its report, the Heritage Foundation criticized the Hong Kong government for the Scheme of Control regulation of electricity prices as well as the regulation of prices for public transport and some residential rents.

A government spokesperson explained the transportation price controls seek to "balance the interests of the public and the operators" and said affordable electricity is "vital." Singapore is already ranked higher than Hong Kong in terms of business, monetary and labor freedoms.

"We are determined to uphold Hong Kong's position as the freest economy in the world," said Financial Secretary John Tsang Chun-wah. "We see the role of the government as that of a facilitator."

Points were taken off Hong Kong's trade freedom score because of "restrictive" pharmaceuticals regulation, market access restrictions for legal services, limited import licensing, and issues involving intellectual property rights that add to the cost of trade.

Do differences in economic freedoms result in large differences in economic growth and prosperity, and why?