Corruption in New Zealand is next to non-existent, says the report.
New Zealand ranks sixth in the world for economic freedom in a new international survey.
Rated 80.2 per cent "free", New Zealand drops one place from last year, swapping positions with the United States in the 14th Index of Economic Freedom, from the Heritage Foundation and the Wall
St Journal. Australia ranks fourth.
New Zealand's ranking places it ahead of Canada, Switzerland, the UK, Netherlands, Luxembourg, Finland and Japan.
Hong Kong was ranked first, ahead of Singapore and Ireland. Bottom of the 157 nations surveyed was North Korea, well below the next worst, Cuba.
The survey measures 10 economic freedoms, including property rights, government controls, corruption and the labour market.
New Zealand scored highest in business freedom, with 99.9 per cent because it takes only 12 days to start a business on average, compared with 43 days worldwide.
Corruption was "next to non-existent" and the degree of labour freedom among the highest in the world.
"New Zealand rates highly in almost all areas of economic freedom," the report says, "but is most impressive in financial freedom, property rights, business, labour and freedom from corruption.
"A globally competitive financial system based on market principles attracts many foreign banks, helped by low inflation and low tariff rates. A strong rule of law protects property rights, and New Zealand is one of the world's most corruption-free countries.
"Foreign and domestically owned businesses enjoy considerable flexibility in licensing, regulation and employment practices."
On the downside, the report said top income tax rates, tax revenue and government spending were "fairly high" - although the overall effect was eclipsed by the amount of economic freedom.
The overall score was 0.8 percentage points down on last year's survey because of drops in five of the 10 categories.
The report notes: "New Zealand could do better in terms of government size and fiscal freedom."
