Approach for multi-criteria ranking of Balkan countries based on the index of economic freedom

Understanding the level of economic freedom is an important indicator for investors and policymakers. The index of economic freedom, which the Heritage Foundation releases annually, is the most significant of the methods used to measure this indicator in practice, as this index evaluates the degree of market openness over the degree of fiscal and regulatory restraint. The research presented in this paper was conducted in order to establish the level of economic freedom in the Balkan countries. For this purpose, a multi-criteria ranking of Balkan countries based on economic freedom criteria was used. The weight of the criteria was determined using the Entropy method, and the countries were ranked using the CRADIS (Compromise Ranking of Alternatives from Distance to ideal Solution) method. These methods employed a double normalisation approach, and according to the results of this application, Bulgaria has the best indicators of economic freedom, while Montenegro has the worst, with sensitivity analysis and validation of the results confirming these findings. The approach of using double normalisation contributes to decision-making stability since the results of different methods are uniform when compared to the use of the classical approach in the case of multi-criteria analysis methods.