Ireland has been ranked seventh out of 157 countries in the latest index of economic freedom.
The index, which is compiled by the Wall Street Journal and Washington think-tank the Heritage Foundation, measures the freedom of economies from government coercion or constraint.
The index shows that the Irish economy is 81.31 per cent free, making it the world's seventh "freest" economy.
The State has been ranked second out of 41 European economies. The UK was fractionally ahead with a score of 81.55 per cent.
Ireland was found to have high levels of business freedom, which measures how free entrepreneurs are to start businesses. The report noted, for example, that starting a business in Ireland takes 19 days, compared to the world average of 48.
Ireland also scored well in financial freedom, which measures the relative openness of the State's banking and financial system. In addition, the State's financial markets were found to be transparent and open to foreign competition, while property rights were seen to be well protected by "an efficient, independent judiciary".
The State's main area of weakness was labour freedom. "As in many other European nations, generous [ labour] laws mean that employment is not as flexible as it should be for maximum job creation and sectoral dynamics," the report said.
