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Economic Freedom of the Economic Freedom of the World: 2009 Annual ReportWorld: 2009 Annual Report
Michael Walker Senior Fellow The Fraser institute
Presented at Economic Freedom of the World Network Meeting
Wroclaw, Poland October 1, 2009
THANK YOU FOR THANK YOU FOR COMING!COMING!
The key to changing policy in the world is changing the climate of opinion about what works and what does not work in encouraging world development
The key to changing the climate of opinion is providing the widest possible audience with good information about the causes of development and under-development
Economic Freedom of the Economic Freedom of the World ProjectWorld Project
Objective: find a way to measure economic freedom and explore the connection between it and other variables
25 year project Led by the late Milton Friedman and Rose
Friedman and Michael Walker Involved 60 of the world’s top scholars
What is the Economic What is the Economic Freedom of the World Index?Freedom of the World Index?
An annual compilation of data representing factors which make a country economically free
Authors: James Gwartney and Robert Lawson A compendium of 42 government policies affecting
economic freedom based on objective data or independent surveys
A ranking of 141 countries representing 95% of the world’s population according to the extent to which they permit their citizens to be economically free
Now a collaboration of Institutes in more than 70 different countries
What is Economic FreedomWhat is Economic Freedom
Individuals have economic freedom when property they acquire without the use of force, fraud, or theft is protected from physical invasions by others and they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. An index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions.
James Gwartney et al. 1996
Components of the Economic Components of the Economic
Freedom of the World IndexFreedom of the World Index
Size of government and taxationPrivate property and the rule of lawSoundness of moneyTrade regulation and tariffsRegulation of business, labour and capital
marketsBased entirely on objective, third party data
and independent surveys for 141 countries
Talk about making a difference …Talk about making a difference …
Albanian Center for Economic Albanian Center for Economic Research (ACER), AlbaniaResearch (ACER), AlbaniaFundación Libertad, ArgentinaFundación Libertad, ArgentinaInstitute of Public Affairs, AustraliaInstitute of Public Affairs, AustraliaTIGRA®, AustriaTIGRA®, AustriaCenter for Economic and Political Center for Economic and Political Research,AzerbaijanResearch,AzerbaijanThe Nassau Institute, BahamasThe Nassau Institute, BahamasMaking Our Economy Right (MOER), Making Our Economy Right (MOER), BangladeshBangladeshScientific Research Mises Center, Scientific Research Mises Center, BelarusBelarusCentre for the New Europe, BelgiumCentre for the New Europe, BelgiumFundacion Libertad y Democracia Fundacion Libertad y Democracia (FULIDE), Bolivia(FULIDE), BoliviaInstituto Liberal do Rio de Janeiro, Instituto Liberal do Rio de Janeiro, BrazilBrazilInstitute for Market Economics, Institute for Market Economics, BulgariaBulgariaLe Centre des Affaires Humaines Le Centre des Affaires Humaines (CEDAH),Burkina Faso(CEDAH),Burkina FasoThe Cambodia Institute of The Cambodia Institute of Development Study, Cambodia Development Study, Cambodia Instituto Libertad y Desarrollo, ChileInstituto Libertad y Desarrollo, ChileInstituto Libertad y Progreso (ILP), Instituto Libertad y Progreso (ILP), ColombiaColombiaInstituto para la Libertad y el Instituto para la Libertad y el Análisis de Políticas, Costa RicaAnálisis de Políticas, Costa RicaThe Institute of Economics, CroatiaThe Institute of Economics, CroatiaLiberální Institut, Czech RepublicLiberální Institut, Czech RepublicCenter for Politiske Studier (CEPOS), Center for Politiske Studier (CEPOS), DenmarkDenmarkFundación Economía y Desarrollo Fundación Economía y Desarrollo Inc, Dominican RepublicInc, Dominican RepublicInstituto Ecuatoriano de Economía Instituto Ecuatoriano de Economía Política,EcuadorPolítica,EcuadorInternational University Audentes, International University Audentes, EstoniaEstoniaAssociation pour la Liberté Association pour la Liberté Economique et le Progrès Social Economique et le Progrès Social (ALEPS), France(ALEPS), France
Center for Business and Society Incorporated (Civita), Center for Business and Society Incorporated (Civita), Norway Norway International Research Foundation (IRF), OmanInternational Research Foundation (IRF), OmanAlternate Solutions Institute, PakistanAlternate Solutions Institute, PakistanPal-Think for Strategic Studies, PalestinePal-Think for Strategic Studies, PalestineFundación Libertad, PanamaFundación Libertad, PanamaCentro de Investigación y Estudios Legales (CITEL), PeruCentro de Investigación y Estudios Legales (CITEL), PeruThe Center for Research and Communication, PhilippinesThe Center for Research and Communication, PhilippinesCentrum im. Adama Smitha, PolandCentrum im. Adama Smitha, PolandCausa Liberal, PortugalCausa Liberal, PortugalRomania Think Tank, RomaniaRomania Think Tank, RomaniaInstitute of Economic Analysis, RussiaInstitute of Economic Analysis, RussiaFree Market Center (FMC), SerbiaFree Market Center (FMC), SerbiaThe F.A. Hayek Foundation, Slovak RepublicThe F.A. Hayek Foundation, Slovak RepublicThe Free Market Foundation of Southern Africa, South The Free Market Foundation of Southern Africa, South AfricaAfricaPathfinder Foundation, Sri LankaPathfinder Foundation, Sri LankaTimbro, SwedenTimbro, SwedenLiberales Institut, SwitzerlandLiberales Institut, SwitzerlandArthur Lok Jack Graduate School of Business, The Arthur Lok Jack Graduate School of Business, The University of the West Indies, Trinidad, W.I.University of the West Indies, Trinidad, W.I.Association for Liberal Thinking, TurkeyAssociation for Liberal Thinking, TurkeyThe Ukrainian Center for Independent Political Research, The Ukrainian Center for Independent Political Research, UkraineUkraineThe Institute of Economic Affairs (IEA), United KingdomThe Institute of Economic Affairs (IEA), United KingdomCATO Institute, USACATO Institute, USAThe Centre for the Dissemination of Economic Knowledge The Centre for the Dissemination of Economic Knowledge (CEDICE), Venezuela(CEDICE), VenezuelaResearch Center for Entrepreneurship Development, Research Center for Entrepreneurship Development, VietnamVietnamZambia Institute for Public Policy Analysis (ZIPPA), Zambia Institute for Public Policy Analysis (ZIPPA), ZambiaZambia
Member Institutes of Economic Freedom of the World Network
Society for Disseminating Economic Society for Disseminating Economic Knowledge: New Economic School – Knowledge: New Economic School – Georgia, GeorgiaGeorgia, GeorgiaLiberales Institut, GermanyLiberales Institut, GermanyThe Institute of Economic Affairs, GhanaThe Institute of Economic Affairs, GhanaCentro de Investigaciones Económicas Centro de Investigaciones Económicas Nacionales, GuatemalaNacionales, GuatemalaInstitut de Recherche pour la Liberte Institut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), HaitiEconomique et la Prosperite (IRLEP), HaitiHong Kong Centre for Economic Research, Hong Kong Centre for Economic Research, Hong KongHong KongSzazadveg Foundation, HungarySzazadveg Foundation, HungaryCentre for Social and Economic Research Centre for Social and Economic Research (RSE), Iceland(RSE), IcelandCentre for Civil Society, IndiaCentre for Civil Society, IndiaThe Institute for Development of Economics The Institute for Development of Economics and Finance, Indonesiaand Finance, IndonesiaOpen Republic Institute, IrelandOpen Republic Institute, IrelandJerusalem Institute for Market Studies, Jerusalem Institute for Market Studies, IsraelIsraelCentro Einaudi, ItalyCentro Einaudi, ItalyBureau d'Analyse d'Ingenierie et de Bureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory CoastLogiciels (BAILO), Ivory CoastYoung Entrepreneurs Association, JordanYoung Entrepreneurs Association, JordanAfrican Research Center for Public Policy African Research Center for Public Policy and Market Process, Kenyaand Market Process, KenyaCenter for Free Enterprise, KoreaCenter for Free Enterprise, KoreaEconomic Policy Institute-Bishkek Economic Policy Institute-Bishkek Consensus, Kyrgyz RepublicConsensus, Kyrgyz RepublicLithuanian Free Market Institute, LithuaniaLithuanian Free Market Institute, LithuaniaD'Letzeburger Land, LuxembourgD'Letzeburger Land, LuxembourgCentro de Investigación para el Desarrollo Centro de Investigación para el Desarrollo A.C., A.C., MexicoMexicoOpen Society Forum, MongoliaOpen Society Forum, MongoliaThe Center for Entrepreneurship and The Center for Entrepreneurship and Economic Development, MontenegroEconomic Development, MontenegroThe Prosperity Foundation, NepalThe Prosperity Foundation, NepalThe New Zealand Business Roundtable, New The New Zealand Business Roundtable, New ZealandZealandInitiative for Public Policy Analysis, NigeriaInitiative for Public Policy Analysis, Nigeria
Sample of Press Coverage forFraser Institute’ Economic Freedom of the World 2008
African Executive,KenyaAfrican Executive,KenyaAl Sabah, KuwaitAl Sabah, KuwaitAljazeera Net,Aljazeera Net,InternationalInternationalThe American Conservative, USAThe American Conservative, USAAmerican Spectator, USAAmerican Spectator, USAAOL Money & Finance, USAAOL Money & Finance, USAAsia Pulse, InternationalAsia Pulse, InternationalAugusta Chronicle, USAAugusta Chronicle, USABBC, InternationalBBC, InternationalBlack Sea Press, GeorgiaBlack Sea Press, GeorgiaBoston Herald, USABoston Herald, USABudapest Sun,Budapest Sun,RomaniaRomaniaBulgarian News Agency, BulgariaBulgarian News Agency, BulgariaBulgarian Post, BulgariaBulgarian Post, BulgariaBusiness Day, South AfricaBusiness Day, South Africa
Business Plus TV, PakistanBusiness Plus TV, Pakistan
Business Recorder, PakistanBusiness Recorder, Pakistan
Business Zone, BulgariaBusiness Zone, BulgariaCato Institute, Cato Institute, USAUSAChinese Canadian Times, CanadaChinese Canadian Times, CanadaChinese Paper,Chinese Paper, ChinaChinaDaily Graphic, GhanaDaily Graphic, GhanaDaily News Sunday, USADaily News Sunday, USADar Al Hayat, LebanonDar Al Hayat, LebanonDarik Finance, BulgariaDarik Finance, BulgariaDonga Korea Daily, KoreaDonga Korea Daily, KoreaEcon Bulgaria,Econ Bulgaria, BulgariaBulgaria
Dawn, PakistanDawn, PakistanLeader Post, CanadaLeader Post, CanadaL'Orient le Jour, LebanonL'Orient le Jour, LebanonMalaysia Paper, MalaysiaMalaysia Paper, MalaysiaMarker Israel,Marker Israel, IsraelIsraelMarketwire, CanadaMarketwire, CanadaMonburkina.com, Burkina FasoMonburkina.com, Burkina FasoMunhwa Daily Korea, KoreaMunhwa Daily Korea, KoreaNaharnet Beirut, LebanonNaharnet Beirut, LebanonNassau Guardian, BahamasNassau Guardian, BahamasNational Post,National Post, CanadaCanadaThe New York Times, USAThe New York Times, USANoticias Lusofonas, AngolaNoticias Lusofonas, AngolaOman Tribune,OmanOman Tribune,OmanPari Newspaper, BulgariaPari Newspaper, BulgariaPortfolio Hungary, HungaryPortfolio Hungary, HungaryRadioPlovdiv, BulgariaRadioPlovdiv, BulgariaReuters, USAReuters, USARussian Paper,Russian Paper, RusiaRusiaSofia News Agency, BulgariaSofia News Agency, BulgariaSouth China morning Post, ChinaSouth China morning Post, ChinaStar Phoenix,CanadaStar Phoenix,CanadaTaiwan Economic News, TaiwanTaiwan Economic News, TaiwanTelegraph-Journal, CanadaTelegraph-Journal, CanadaTimes of India, IndiaTimes of India, IndiaVancouver Sun, CanadaVancouver Sun, CanadaVenezuelan Paper, VenezuelaVenezuelan Paper, VenezuelaXinhua, ChinaXinhua, ChinaZambia Post, ZambiaZambia Post, ZambiaZimbabwe Independent, ZimbabweZimbabwe Independent, Zimbabwe
Economia y Negocios, InternationalEconomia y Negocios, InternationalEconomic Times India, IndiaEconomic Times India, IndiaEdmonton Journal, CanadaEdmonton Journal, CanadaEl Economista, InternationalEl Economista, InternationalEl Economista.es, SpainEl Economista.es, SpainFinancial News Korea, KoreaFinancial News Korea, KoreaFinancial PostFinancial Post CanadaCanadaFinanciarul, RomaniaFinanciarul, RomaniaForeign Policy, USAForeign Policy, USAGeorgian Business Week, GeorgiaGeorgian Business Week, GeorgiaGlobe and Mail, CanadaGlobe and Mail, CanadaGlobe Investor, USAGlobe Investor, USAGlobes, IsraelGlobes, IsraelHankyoreh Daily Korea, KoreaHankyoreh Daily Korea, KoreaHerald (Ottawa, KS), USAHerald (Ottawa, KS), USAHong Kong Commercial Daily, Hong Hong Kong Commercial Daily, Hong KongKongHong Kong Economic Times, Hong KongHong Kong Economic Times, Hong KongHungarian News Digest, HungaryHungarian News Digest, HungaryIndian Business Insight, IndiaIndian Business Insight, IndiaInvestor's Business Daily, USAInvestor's Business Daily, USAIsrael Business Arena, IsraelIsrael Business Arena, IsraelJang Lahore, PakistanJang Lahore, PakistanKatmandu Post, NepalKatmandu Post, NepalLa Presse Canadienne, CanadaLa Presse Canadienne, CanadaLatin Business Chronicle, USALatin Business Chronicle, USALe Droit, CanadaLe Droit, CanadaLeader, IcelandLeader, Iceland
Sub-national and Regional IndicesSub-national and Regional Indices
Economic Freedom of the Arab WorldEconomic Freedom of the Arab World
Marketization Index of Chinese Provinces
Economic Freedom Index of Indian States
Economic Freedom Index of German States
Economic Freedom Index of Argentinean Provinces
Economic Freedom of North AmericaEconomic Freedom of North America
Introducing the 2009 Economic Introducing the 2009 Economic Freedom of the World Index ResultsFreedom of the World Index Results
Overall Economic Freedom Index Overall Economic Freedom Index and the Top 10and the Top 10
Source: The Fraser Source: The Fraser Institute.Institute.
0 2 4 6 8 10
Score (out of 10)
Hong Kong
Singapore
New Zealand
Average of top 10
Switzerland
Chile
United States
Ireland
Canada
Australia
United Kingdom
Overall Economic Freedom Overall Economic Freedom Index and the Bottom TenIndex and the Bottom Ten
0 2 4 6 8 10
Score (out of 10)
Niger
Chad
Congo, Dem.R.
Guinea-Bissau
Central Afr. Rep.
Congo, Rep.of
Venezuela
Angola
Myanmar
Zimbabwe
Source: The Fraser Source: The Fraser Institute.Institute.
Economic Freedom Over TimeEconomic Freedom Over Time
6.15.5 5.4 5.5 5.7 6.0
6.4 6.4 6.4 6.4 6.4 6.6 6.6 6.6
0
2
4
6
8
10
Eco
no
mic
Fre
edo
m S
core
1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007
Source: The Fraser Source: The Fraser Institute.Institute.
Economic Freedom and the Top 10Economic Freedom and the Top 10
Size of Government and the Top 10Size of Government and the Top 10
0 2 4 6 8 10
Score (out of 10)
Hong Kong
Singapore
Chile
Switzerland
Average of top 10
United States
Australia
New Zealand
United Kingdom
Canada
Ireland
Source: The Fraser Source: The Fraser Institute.Institute.
Legal System and Property Rights Legal System and Property Rights and the Top 10and the Top 10
0 2 4 6 8 10
Score (out of 10)
New Zealand
Switzerland
Australia
Canada
Singapore
Hong Kong
Average of top 10
United Kingdom
Ireland
United States
Chile
Source: The Fraser Source: The Fraser Institute.Institute.
Sound Money and the Top 10Sound Money and the Top 10
0 2 4 6 8 10
Score (out of 10)
Switzerland
United States
New Zealand
Ireland
Hong Kong
Australia
Average of top 10
Canada
Singapore
United Kingdom
Chile
Source: The Fraser Source: The Fraser Institute.Institute.
Freedom to Trade Internationally Freedom to Trade Internationally and the Top 10and the Top 10
0 2 4 6 8 10
Score (out of 10)
Hong Kong
Singapore
Chile
Ireland
Average of top 10
New Zealand
United States
United Kingdom
Canada
Switzerland
Australia
Source: The Fraser Source: The Fraser Institute.Institute.
Regulations and the Top 10Regulations and the Top 10
0 2 4 6 8 10
Score (out of 10)
New Zealand
Hong Kong
United States
Singapore
Chile
Canada
United Kingdom
Average of top 10
Australia
Switzerland
Ireland
Source: The Fraser Source: The Fraser Institute.Institute.
Credit Market Regulations Credit Market Regulations and the Top 10and the Top 10
0 2 4 6 8 10
Score (out of 10)
New Zealand
United Kingdom
Australia
United States
Canada
Average of top 10
Hong Kong
Singapore
Chile
Switzerland
Ireland
Source: The Fraser Source: The Fraser Institute.Institute.
Labor Market Regulations Labor Market Regulations and the Top 10and the Top 10
0 2 4 6 8 10
Score (out of 10)
United States
Hong Kong
Chile
New Zealand
Switzerland
Average of top 10
Australia
United Kingdom
Canada
Singapore
Ireland
Source: The Fraser Source: The Fraser Institute.Institute.
Business Regulations Business Regulations and the Top 10and the Top 10
0 2 4 6 8 10
Score (out of 10)
Singapore
New Zealand
Hong Kong
Canada
Chile
Average of top 10
Switzerland
Ireland
Australia
United States
United Kingdom
Source: The Fraser Source: The Fraser Institute.Institute.
Why is Economic Freedom Why is Economic Freedom Important?Important?
Economic rights are fundamental rights in the sense that without them there can be no political freedom or civil freedoms
They are a prerequisite for growth and development
They are a prerequisite for broader human development
The impact on economic growth The impact on economic growth and developmentand development
Income (per person) of the Income (per person) of the Bottom TenBottom Ten
0 10,000 20,000 30,000 40,000 50,000
GDP per Capita, 2007 (ppp)
Venezuela
Angola
Congo, Rep. Of
Chad
Myanmar
Central Afr. Rep.
Niger
Guinea-Bissau
Congo, Dem. R.
Sources: The Fraser Institute; The World Bank, World Development Sources: The Fraser Institute; The World Bank, World Development Indicators, Indicators, 2009.2009.
Income (per person) of the Top 10Income (per person) of the Top 10
$0 $10,000 $20,000 $30,000 $40,000 $50,000
GDP per Capita, 2007 (ppp)
SingaporeUnited States
IrelandHong KongSwitzerland
CanadaUnited Kingdom
AustraliaNew Zealand
Chile
Sources: The Fraser Institute; The World Bank, World Development Sources: The Fraser Institute; The World Bank, World Development Indicators, Indicators, 2009.2009.
Per Capita Income and Economic Per Capita Income and Economic Freedom QuartileFreedom Quartile
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
GD
P P
er C
apit
a (p
pp
), 2
007
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ………………... Most FreeLeast Free ………………... Most FreeSources: The Fraser Institute; The World Bank, World Development Sources: The Fraser Institute; The World Bank, World Development Indicators, Indicators, 2009.2009.
Growth in Real GDP Per Capita Growth in Real GDP Per Capita and Economic Freedom Quartileand Economic Freedom Quartile
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
GD
P P
er
Ca
pit
a %
Gro
wth
,
19
90
-20
07
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ……………..…… Most FreeLeast Free ……………..…… Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.2009.
Foreign Direct Investment and Foreign Direct Investment and Economic Freedom QuartileEconomic Freedom Quartile
0.0%
3.2%
6.4%
9.7%
12.9%
16.1%
19.3%
Fo
reig
n d
ire
ct
inv
es
tme
nt,
ne
t in
flo
ws
(%
of
GD
P),
19
90
-20
07
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ……………...…... Most FreeLeast Free ……………...…... Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.2009.
Economic Freedom,the Poor, andEconomic Freedom,the Poor, andInequalityInequality
Income Share of the Poorest 10% and Income Share of the Poorest 10% and
Economic FreedomEconomic Freedom
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Inco
me S
hare
Held
by
Lo
west
10%
, 1990-2
007
Most FreeQuartile
2ndQuartile
3rdQuartile
Least FreeQuartile
Least Free …………….. Most FreeLeast Free …………….. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators,
2009.2009.
Per Capita Income of Poorest 10% Per Capita Income of Poorest 10% and Economic Freedomand Economic Freedom
$0
$2,000
$4,000
$6,000
$8,000
$10,000
Most Free Quartile2nd Quartile3rd QuartileLeast Free Quartile0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Income amount held by lowest 10% (1990-2007)Income share held by lowest 10% (1990-2007)
Least Free ……………………. Most Free Least Free ……………………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators,
2009.2009.
Economic Freedom, Other Economic Freedom, Other Freedoms and DemocracyFreedoms and Democracy
Economic Freedom and CorruptionEconomic Freedom and Corruption
0
2
4
6
8
10
Co
rru
pti
on
Ra
tin
g
(ou
t o
f 1
0)
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free …………………. Most FreeLeast Free …………………. Most Free
Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, 2006/2007, available at http://www.transparency.org.2006/2007, available at http://www.transparency.org.
Economic Freedom and Political RightsEconomic Freedom and Political Rights
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Po
litic
al R
igh
ts (
ou
t o
f 7)
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free …………………. Most FreeLeast Free …………………. Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at http://www.freedomhouse.org/.2007, available at http://www.freedomhouse.org/.
Economic Freedom and Civil LibertiesEconomic Freedom and Civil Liberties
0.0
2.0
4.0
6.0
8.0
10.0
Civ
il L
iber
ties
(o
ut
of
7)
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free …………………… Most FreeLeast Free …………………… Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at http://www.freedomhouse.org/.Ratings, 2007, available at http://www.freedomhouse.org/.
The impact of Economic Freedom on The impact of Economic Freedom on the UN’s Human Development Index the UN’s Human Development Index and other indicators of well-beingand other indicators of well-being
Human Development Index and Economic Human Development Index and Economic Freedom QuartilesFreedom Quartiles
0.0
0.2
0.4
0.6
0.8
1.0
Un
ited
Nat
ion
s H
um
an D
evel
op
men
t In
dex
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ……………. Most FreeLeast Free ……………. Most Free
Sources: The Fraser Institute; United Nations Development Programmme, Human Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2009, available at http://hdr.undp.org/.Development Indicators 2009, available at http://hdr.undp.org/.
Life Expectancy at Birth and Life Expectancy at Birth and Economic Freedom QuartilesEconomic Freedom Quartiles
0
20
40
60
80
Yea
rs
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ……………. Most FreeLeast Free ……………. Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators,
2009.2009.
Infant Mortality and Economic Infant Mortality and Economic Freedom QuartileFreedom Quartile
0
20
40
60
80
Per
1,0
00 li
ve b
irth
s, 2
007
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ………..………. Most FreeLeast Free ………..………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators,
2009.2009.
% of Population Using Improved % of Population Using Improved Water SourcesWater Sources
0
20
40
60
80
100
Per
cen
tag
e
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ………………... Most FreeLeast Free ………………... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators,
2009.2009.
Environmental Performance and Economic Environmental Performance and Economic Freedom QuartileFreedom Quartile
0
20
40
60
80
100
Ind
ex (
ou
t o
f 10
0)
Most FreeQuartile
2nd Quartile3rd QuartileLeast FreeQuartile
Least Free ………..……….. Most FreeLeast Free ………..……….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators,
2009.2009.
Is the EFW Project Working?
Is Global Policy Performance improving? Is the Economic Freedom of the World ranking
of policy producing better policy choices? Can the Economic Freedom of the World Data
show us whether there is improvement? The following slides examine global policy
conduct for patterns of development
What would we expect to find if the EFW process is working?
A process of learning from experienceStarting from disagreement amongst
countries about the correct course of policy we would hope to see a reduction over time in the amount of policy variation and increasing adoption of polices that enhance economic freedom
The following chart sequence shows what we would observe in a world which was learning from experience
What a desirable evolution of policy would look like
01020
3040
0 2 4 6 8 10
Policy Score out of 10
Co
un
try
Sc
ore
Fre
qu
en
cy
1970
1975
1980
1985
1990
1995
2000
2005
How has the Evolution toward Economic Freedom Actually
Proceeded?In the following slides we examine the
extent of agreement amongst countries about freedom policy choices over a thirty year period
We examine each component of economic freedom separately and then the total measure
Global Agreement about The Size of Government
00.05
0.10.15
0.20.25
0 2 4 6 8 10
Policy Score
Coun
try S
core
Fre
quen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Global Agreement about The Size of Government
00.20.40.60.8
1
0 2 4 6 8 10
Policy Score
Cum
ulat
ive
Freq
uenc
y
1970
1975
1980
1985
1990
1995
2000
2005
Evolution in Global Policy about the Size of Government
0
1
2
3
4
5
6
7
1970 1975 1980 1985 1990 1995 2000 2005
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Mean ScoreVariation
Global Agreement about property rights and the rule of law
0
0.05
0.1
0.15
0.2
0 2 4 6 8 10
Policy Score
Co
un
try
Sco
re F
req
uen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Global Agreement about property rights and the rule of law
00.20.40.60.8
1
0 2 4 6 8 10
Policy Score
Co
un
try
Sc
ore
Fre
qu
en
cy
1970
1975
1980
1985
1990
1995
2000
2005
Evolution in Global Policy about
Property Rights and Rule of Law
0
1
2
3
4
5
6
7
1970 1975 1980 1985 1990 1995 2000 2005
Sc
ore
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Va
ria
tio
n
Mean ScoreVariance
Global Agreement about the need for sound money
-0.050
0.050.1
0.150.2
0.250.3
0 2 4 6 8 10
Policy score
Coun
try S
core
Fre
quen
cy 1970
1975
1980
1985
1990
1995
2000
2005
Global Agreement about the need for sound money
00.20.40.60.8
1
0 2 4 6 8 10
Policy score
Coun
try S
core
Fre
quen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Evolution in Global Policy about the need for sound money
0
1
2
3
4
5
6
7
8
9
1970 1975 1980 1985 1990 1995 2000 2005
0
0.2
0.4
0.6
0.8
1
1.2
MeanScoreVariation
The Triumph of Milton Friedman
Over World Inflation Rates
0
5
10
15
20
25
30
35
Jan-9
1
Jan-9
2
Jan-9
3
Jan-9
4
Jan-9
5
Jan-9
6
Jan-9
7
Jan-9
8
Jan-9
9
Jan-0
0
Jan-0
1
Jan-0
2
Jan-0
3
Jan-0
4
Jan-0
5
Jan-0
6
Jan-0
7
Global Agreement about Tariffs and Trade regulation
-0.050
0.050.1
0.150.2
0.25
0 2 4 6 8 10
Policy Score
Cou
ntry
Sco
re F
requ
ency
1970
1975
1980
1985
1990
1995
2000
2005
Global Agreement about Tariffs and Trade regulation
00.20.40.60.8
1
0 2 4 6 8 10
Policy Score
Cou
ntry
Sco
re F
requ
ency
1970
1975
1980
1985
1990
1995
2000
2005
Evolution of Global Policy about
Tariff and Trade Regulations
0
1
2
3
4
5
6
7
8
1970 1975 1980 1985 1990 1995 2000 2005
0
0.1
0.2
0.3
0.4
0.5
0.6
Mean Score
Variation
Global Agreement about regulation of business, labour
and capital
0
0.1
0.2
0.3
0.4
0 2 4 6 8 10
Policy Score
Co
un
try
Sco
re F
req
uen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Global Agreement about regulation of business, labour
and capital
0
0.2
0.4
0.6
0.8
1
1.2
0 2 4 6 8 10
Policy Score
Co
un
try
Sco
re F
req
uen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Evolution of Global Policy about Regulation
0
1
2
3
4
5
6
7
1970 1975 1980 1985 1990 1995 2000 2005
0
0.05
0.1
0.15
0.2
0.25
0.3
Mean Score
Variation
Global Agreement about Economic Freedom
-0.05
0
0.05
0.1
0.15
0.2
0.25
0 2 4 6 8 10
Policy Score
Coun
try S
core
Fre
quen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Global Agreement about Economic Freedom
-0.2
0
0.2
0.4
0.6
0.8
1
1.2
0 2 4 6 8 10
Policy Score
Coun
try S
core
Fre
quen
cy
1970
1975
1980
1985
1990
1995
2000
2005
Evolution of Global Pursuit of Economic Freedom
0
1
2
3
4
5
6
7
1970 1975 1980 1985 1990 1995 2000 2005
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
Mean ScoreVariation
ConclusionsConclusions
Economic Freedom
Increases prosperity for all Reduces poverty Increases other freedoms Improves quality of life There is increasing global agreement about the
need for more economic freedom Recent deviations from some aspects of
economic freedom will be unlikely to persist in the face of the general move toward more freedom
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