Australia has the third freest economy in the world

AUSTRALIA has the third freest economy on the globe, an index of economic freedoms by United States think tank the Heritage Foundation has found.

Rated behind only Hong Kong and Singapore for economic freedoms, Australia was given a score of 82 out of 100 on the foundation's 2014 index.

Australia slipped 0.6 points lower from last year, with gains in investment freedom outweighed by falls in monetary and labour freedoms.

The rank measures economic freedom across four main issues; rule of law, regulatory efficiency, limited government and open markets.

And despite maintaining its high ranking, and improving its score by 7.9 points over the past 20 years, the index showed challenges for Australia.

It found slight falls across regulatory efficiency, limited government and rule of law measures, on the back of government spending, labour and business freedom and "freedom from corruption".

The international index also specifically cited the 2013 New South Wales Independent Commission Against Corruption investigations as the key driver in the fall in the freedom from corruption measure.