UVA index ranks US second in world’s most capitalist countries

Switzerland is the most capitalistic country in the world, with the United States coming in a close second, according to a first-ever global index and data set from the University of Virginia.

Three years in the making, the Global Capitalism Index is the product of experts at UVA’s Darden School of Business and Karsh Institute of Democracy. The index scores 161 countries across eight measures of capitalism, including ease of business formation and the flow of goods to and from the country.

Experts involved in creating the index said the data show promise for understanding how capitalist conditions relate to democracy, corruption, human well-being, and inequality within a country. A team of researchers led by the Karsh Institute of Democracy’s Democracy and Capitalism Lab and UVA Darden’s Institute for Business in Society assembled the data to help define and measure capitalism worldwide.

The index uses figures compiled from 2009 to 2025 and is designed to be updated.

“Understanding the conditions that allow democratic self-government to thrive requires us to examine the economic systems in which people and institutions operate,” said Melody Barnes, executive director of the Karsh Institute of Democracy. “The Global Capitalism Index gives researchers a rigorous new tool for examining how different forms of capitalism relate to democratic institutions, individual well-being, inequality and other dimensions of democratic life.”

Although there is a large body of research on the concept and function of democracy, there is little on capitalism, the researchers wrote.

“For decades, scholars, policymakers and the public have lacked a rigorous, quantitative framework for defining and measuring capitalism,” the index authors wrote in an executive summary. “Even capitalism’s intellectual champions – Adam Smith, Joseph Schumpeter, Friedrich Hayek, Milton Friedman and others – produced widely varied definitions of the concept. …There is a substantial body of literature defining democracy, but scholarly efforts to define and measure capitalism have been difficult and fractured.”

Under the index’s 100-point scale, the top-ranked country was Switzerland at 96.6, followed by the U.S. at 95, Hong Kong at 94.5 and Canada at 93.8.

From the bottom rankings, Venezuela scored 8.9; Libya, 21.8; Chad, 24.1; and Mauritania, 24.2.

“If you ask anyone what capitalism is, the answers are all different, and that makes it hard to argue about the validity or value of it,” said Scott Miller, an assistant business professor at the Darden School, director of the Democracy and Capitalism Lab and lead author on the project. “We concluded that this word – capitalism – matters to everyone, so it matters to define it and measure how it really works across the globe.”

Looking at different sectors of capitalism in a country adds nuance and insight into its economy and culture, index authors said. For example, Seychelles and China rank 50th and 33rd, respectively, and Nordic countries rank highly overall, even though they are associated with high levels of social support.

Here are the U.S. rankings listed in the index:

• No. 1 in capital market sophistication
• No. 3 in the free flow of goods and capital
• No. 4 in market-supporting public policy
• No. 6 in the ease of starting new businesses
• No. 10 in labor market openness
• No. 10 in market competition
• No. 17 in terms of solvency, access and regulatory quality of its banking system
• No. 17 in strength of private property, contract enforcement, rule of law and freedom from corruption

In addition to comparing countries, the index also examines different forms of capitalism. Rather than a monolithic economic model, the index examines capitalism in four categories:

• Entrepreneurial: Strong in new business formation and market policies; weaker in property rights and free flow of goods and capital. The top three are Switzerland, Hong Kong and the U.S.
• Corporate: Strong in capital markets and banking stability and growth, but weak in market competition, labor market freedom, market policy and business formation. Japan and South Korea are the most capitalist among these countries.
• Institutional: Strong in the “real economy” (market competition, labor market, business formation) and significant weakness in the financial sector (banking and capital markets). Norway and Western Europe lead this category. 
• Commercial Capitalism: Defined by the primacy of free flow of goods, capital and property rights and private ownership. Everything else is negative. Notable outliers include Singapore and France.

“For individual countries, the index makes it much easier to identify what conditions are conducive to capitalism and which are not,” Miller said. “Using China as an example, we can see in sharper relief the profile and shape of the underlying economy, including surprisingly strong business conditions, but increasingly restricted flow of goods and capital.”