Ireland is the world's fifth most economically free country, according to a new report.

The Republic's position is unchanged from last year's index. The index, called the "Index of Economic Freedom" was compiled by the Heritage Foundation and the Wall Street Journal.

The index which examines the openness of economies worldwide, ranked Hong Kong as the world's freest economy. It is followed by Singapore, Luxembourg, Estonia and Ireland.

It said that over the last nine years, the countries that had done most to improve their score on the index's 10 measures of economic freedom were those that have, in general, experienced the highest rates of economic growth.

It found that Ireland's "modern, highly industrialised economy" grew by 80 per cent in real terms during the 1990s.

"GDP per capita is now 122 per cent of the EU average," it says.

The index says Ireland has one of the world's most pro-business environments, especially for foreign businesses and investments and "Prime Minister Bertie Ahern, whose Fianna Fáil party is in coalition with the Progressive Democrats, seems certain to maintain it."

The index points out that Ireland has become a major centre for US investment in Europe. "Although accounting for 1 per cent of the euro zone market, it received nearly one-third of US investment in the EU.

The categories measured to assess economic freedom are trade policy, fiscal burden of government, government intervention in the economy, monetary policy, capital flows and foreign investment, banking and finance, wages and prices, property rights, regulation and informal (or black) market activity.

The Wall Street Journal is owned by the Dow Jones and has a combined print and online circulation of 2.1 million. The Heritage Foundation is a conservative research institute.