Economic Freedom of the World Index:  A comparative examination <ul><li>Fred McMahon </li></ul><ul><li>Director, Globaliza...
Thanks <ul><li>The Friedrich Naumann Foundation for Liberty deserves great credit for making this meeting happen and cover...
Economic Freedom of the World Project <ul><li>Objective: find a way to measure economic freedom and explore the connection...
What is the Economic Freedom of the World Index? <ul><li>An annual compilation of data representing factors which make a c...
What is Economic Freedom <ul><li>Individuals have economic freedom when property they acquire without the use of force, fr...
Components of the Economic Freedom of the World Index   <ul><li>Size of government and taxation </li></ul><ul><li>Private ...
Talk about making a difference …
Albanian Center for Economic Research (ACER), Albania Fundación Libertad, Argentina Institute of Public Affairs, Australia...
Sample of Press Coverage for Fraser Institute’ Economic Freedom of the World 2008 African Executive,Kenya Al Sabah, Kuwait...
Sub-national and Regional Indices
Economic 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 America
Introducing the 2009 Economic Freedom of the World Index Results
 
Overall Economic Freedom Index and the Top 10 Source: The Fraser Institute.
Overall Economic Freedom Index and the Bottom Ten Source: The Fraser Institute.
Economic Freedom Over Time Source: The Fraser Institute.
Why is Economic Freedom Important? <ul><li>Economic rights are fundamental rights in the sense that without them there can...
The impact on economic growth and development
Per Capita Income and Economic Freedom Quartile Least Free ………………... Most Free Sources:  The Fraser Institute; The World B...
Growth in Real GDP Per Capita and Economic Freedom Quartile Least Free ……………..…… Most Free Sources:  The Fraser Institute;...
Foreign Direct Investment and Economic Freedom Quartile Least Free ……………...…... Most Free Sources:  The Fraser Institute; ...
Economic Freedom,the Poor, and Inequality
Economic Freedom,the Poor, and Inequality
Income Share of the Poorest 10% and Economic Freedom   Least Free …………….. Most Free Sources:  The Fraser Institute; The Wo...
Per Capita Income of Poorest 10% and Economic Freedom Least Free ……………………. Most Free  Sources:  The Fraser Institute; The ...
Economic Freedom, Other Freedoms and Democracy
Economic Freedom and Corruption Least Free …………………. Most Free   Sources:  The Fraser Institute; Transparency International...
Economic Freedom and Political Rights   Least Free …………………. Most Free   Sources:  The Fraser Institute; Freedom House, Fre...
Economic Freedom and Civil Liberties  Lower ratings indicate higher level of civil liberties Least Free …………………… Most Free...
The impact of Economic Freedom on the UN’s Human Development Index and other indicators of well-being
Human Development Index and Economic Freedom Quartiles Least Free  …………….  Most Free Sources: The Fraser Institute; United...
Life Expectancy at Birth and Economic Freedom Quartiles Least Free  …………….  Most Free Sources:  The Fraser Institute; The ...
Infant Mortality and Economic Freedom Quartile Least Free ………..………. Most Free   Sources:  The Fraser Institute; The World ...
% of Population Using Improved Water Sources Least Free ………………... Most Free   Sources:  The Fraser Institute; The World Ba...
Environmental Performance and Economic Freedom Quartile Least Free ………..……….. Most Free   Sources:  The Fraser Institute; ...
Conclusions <ul><li>Economic Freedom   </li></ul><ul><li>Increases prosperity for all </li></ul><ul><li>Reduces poverty  <...
The impact on economic growth and development
Per Capita Income and Economic Freedom Quartile Least Free ………………... Most Free Sources:  The Fraser Institute; The World B...
Growth in Real GDP Per Capita and Economic Freedom Quartile Least Free ……………..…… Most Free Sources:  The Fraser Institute;...
Foreign Direct Investment and Economic Freedom Quartile Least Free ……………...…... Most Free Sources:  The Fraser Institute; ...
The Global Competitiveness Report   The Global Competitiveness Index (GCI) … captures the microeconomic and macroeconomic ...
Doing Business   <ul><li>Doing Business  focuses on 10 topics, with the </li></ul><ul><li>specific aim of measuring the re...
Heritage Economic Freedom Index <ul><li>Subjective rankings </li></ul><ul><li>Cannot be reproduced </li></ul><ul><li>Impos...
www.freetheworld.com www.fraserinstitute.org
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Economic Freedom of the World Index: A Comparative Examination

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Presentation by Mr. Fred McMahon, Director, Globalization Studies, Fraser Institute at the 4. Economic Freedom of the Arab World Conference in Marrakech, 13.-15. November 2009

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Economic Freedom of the World Index: A Comparative Examination

  1. 1. Economic Freedom of the World Index: A comparative examination <ul><li>Fred McMahon </li></ul><ul><li>Director, Globalization Studies </li></ul><ul><li>The Fraser institute </li></ul><ul><li>Economic Freedom of the Arab World Meeting </li></ul><ul><li>Marrakesh, Morocco </li></ul>
  2. 2. Thanks <ul><li>The Friedrich Naumann Foundation for Liberty deserves great credit for making this meeting happen and covering so many of the costs. </li></ul><ul><li>To my friend, Salem Al Ismaily and the IRF: Tireless champions of economic freedom in this region. </li></ul><ul><li>And to our local hosts, Jeunes Dirigeants d’Entreprise (CJD) of Morocco </li></ul>
  3. 3. Economic Freedom of the World Project <ul><li>Objective: find a way to measure economic freedom and explore the connection between it and other variables </li></ul><ul><li>25 year project </li></ul><ul><li>Led by the late Milton Friedman and Rose Friedman and Michael Walker </li></ul><ul><li>Involved 60 of the world’s top scholars </li></ul>
  4. 4. What is the Economic Freedom of the World Index? <ul><li>An annual compilation of data representing factors which make a country economically free </li></ul><ul><li>Authors: James Gwartney and Robert Lawson </li></ul><ul><li>A compendium of 42 government policies affecting economic freedom based on objective data or independent surveys </li></ul><ul><li>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 </li></ul><ul><li>Now a collaboration of Institutes in 75 nations and territories </li></ul>
  5. 5. What is Economic Freedom <ul><li>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. </li></ul><ul><li>James Gwartney et al. 1996 </li></ul>
  6. 6. Components of the Economic Freedom of the World Index <ul><li>Size of government and taxation </li></ul><ul><li>Private property and the rule of law </li></ul><ul><li>Soundness of money </li></ul><ul><li>Trade regulation and tariffs </li></ul><ul><li>Regulation of business, labour and capital markets </li></ul><ul><li>Based entirely on objective, third party data and independent surveys for 141 countries </li></ul>
  7. 7. Talk about making a difference …
  8. 8. Albanian Center for Economic Research (ACER), Albania Fundación Libertad, Argentina Institute of Public Affairs, Australia TIGRA®, Austria Center for Economic and Political Research,Azerbaijan The Nassau Institute, Bahamas Making Our Economy Right (MOER), Bangladesh Scientific Research Mises Center, Belarus Centre for the New Europe, Belgium Fundacion Libertad y Democracia (FULIDE), Bolivia Instituto Liberal do Rio de Janeiro, Brazil Institute for Market Economics, Bulgaria Le Centre des Affaires Humaines (CEDAH),Burkina Faso The Cambodia Institute of Development Study, Cambodia Instituto Libertad y Desarrollo, Chile Instituto Libertad y Progreso (ILP), Colombia Instituto para la Libertad y el Análisis de Políticas, Costa Rica The Institute of Economics, Croatia Liberální Institut, Czech Republic Center for Politiske Studier (CEPOS), Denmark Fundación Economía y Desarrollo Inc, Dominican Republic Instituto Ecuatoriano de Economía Política,Ecuador International University Audentes, Estonia Association pour la Liberté Economique et le Progrès Social (ALEPS), France Society for Disseminating Economic Knowledge:, New Economic School – Georgia, Georgia Center for Business and Society Incorporated (Civita), Norway International Research Foundation (IRF), Oman Alternate Solutions Institute, Pakistan Pal-Think for Strategic Studies, Palestine Fundación Libertad, Panama Centro de Investigación y Estudios Legales (CITEL), Peru The Center for Research and Communication, Philippines Centrum im. Adama Smitha, Poland Causa Liberal, Portugal Romania Think Tank, Romania Institute of Economic Analysis, Russia Free Market Center (FMC), Serbia The F.A. Hayek Foundation, Slovak Republic The Free Market Foundation of Southern Africa, South Africa Pathfinder Foundation, Sri Lanka Timbro, Sweden Liberales Institut, Switzerland Arthur Lok Jack Graduate School of Business, The University of the West Indies, Trinidad, W.I. Association for Liberal Thinking, Turkey The Ukrainian Center for Independent Political Research, Ukraine The Institute of Economic Affairs (IEA), United Kingdom CATO Institute, USA The Centre for the Dissemination of Economic Knowledge (CEDICE), Venezuela Research Center for Entrepreneurship Development, Vietnam Zambia Institute for Public Policy Analysis (ZIPPA), Zambia Member Institutes of Economic Freedom of the World Network Liberales Institut, Germany The Institute of Economic Affairs, Ghana Centro de Investigaciones Económicas Nacionales, Guatemala Institut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), Haiti Hong Kong Centre for Economic Research, Hong Kong Szazadveg Foundation, Hungary Centre for Social and Economic Research (RSE), Iceland Centre for Civil Society, India The Institute for Development of Economics and Finance, Indonesia Open Republic Institute, Ireland Jerusalem Institute for Market Studies, Israel Centro Einaudi, Italy Bureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory Coast Young Entrepreneurs Association, Jordan African Research Center for Public Policy and Market Process, Kenya Center for Free Enterprise, Korea Economic Policy Institute-Bishkek Consensus, Kyrgyz Republic Lithuanian Free Market Institute, Lithuania D'Letzeburger Land, Luxembourg Centro de Investigación para el Desarrollo A.C., Mexico Open Society Forum, Mongolia The Center for Entrepreneurship and Economic Development, Montenegro The Prosperity Foundation, Nepal The New Zealand Business Roundtable, New Zealand Initiative for Public Policy Analysis, Nigeria
  9. 9. Sample of Press Coverage for Fraser Institute’ Economic Freedom of the World 2008 African Executive,Kenya Al Sabah, Kuwait Aljazeera Net, International The American Conservative, USA American Spectator, USA AOL Money & Finance, USA Asia Pulse, International Augusta Chronicle, USA BBC, International Black Sea Press, Georgia Boston Herald, USA Budapest Sun, Romania Bulgarian News Agency, Bulgaria Bulgarian Post, Bulgaria Business Day, South Africa Business Plus TV, Pakistan Business Recorder, Pakistan Business Zone, Bulgaria Chinese Canadian Times, Canada Chinese Paper, China Daily Graphic, Ghana Daily News Sunday, USA Dar Al Hayat, Lebanon Darik Finance, Bulgaria Donga Korea Daily, Korea Econ Bulgaria, Bulgaria Dawn, Pakistan Leader Post, Canada L'Orient le Jour, Lebanon Malaysia Paper, Malaysia Marker Israel, Israel Marketwire, Canada Monburkina.com, Burkina Faso Munhwa Daily Korea, Korea Naharnet Beirut, Lebanon Nassau Guardian, Bahamas National Post, Canada The New York Times, USA Noticias Lusofonas, Angola Oman Tribune,Oman Pari Newspaper, Bulgaria Portfolio Hungary, Hungary RadioPlovdiv, Bulgaria Reuters, USA Russian Paper, Rusia Sofia News Agency, Bulgaria South China morning Post, China Star Phoenix,Canada Taiwan Economic News, Taiwan Telegraph-Journal, Canada Times of India, India Vancouver Sun, Canada Venezuelan Paper, Venezuela Xinhua, China Economia y Negocios, International Economic Times India, India Edmonton Journal, Canada El Economista, International El Economista.es, Spain Financial News Korea, Korea Financial Post, Canada Financiarul, Romania Foreign Policy, USA Georgian Business Week, Georgia Globe and Mail, Canada Globe Investor, USA Globes, Israel Hankyoreh Daily Korea, Korea Herald (Ottawa, KS), USA Hong Kong Commercial Daily, Hong Kong Economic Times, Hong Kong Hungarian News Digest, Hungary Indian Business Insight, India Investor's Business Daily, USA Israel Business Arena, Israel Jang Lahore, Pakistan Katmandu Post, Nepal La Presse Canadienne, Canada Latin Business Chronicle, USA Le Droit, Canada Leader, Iceland Zambia Post, Zambia Zimbabwe Independent, Zimbabwe
  10. 10. Sub-national and Regional Indices
  11. 11. Economic Freedom of the Arab World
  12. 12. Marketization Index of Chinese Provinces
  13. 13. Economic Freedom Index of Indian States
  14. 14. Economic Freedom Index of German States
  15. 15. Economic Freedom Index of Argentinean Provinces
  16. 16. Economic Freedom of North America
  17. 17. Introducing the 2009 Economic Freedom of the World Index Results
  18. 19. Overall Economic Freedom Index and the Top 10 Source: The Fraser Institute.
  19. 20. Overall Economic Freedom Index and the Bottom Ten Source: The Fraser Institute.
  20. 21. Economic Freedom Over Time Source: The Fraser Institute.
  21. 22. Why is Economic Freedom Important? <ul><li>Economic rights are fundamental rights in the sense that without them there can be no political freedom or civil freedoms </li></ul><ul><li>They are a prerequisite for growth and development </li></ul><ul><li>They are a prerequisite for broader human development </li></ul>
  22. 23. The impact on economic growth and development
  23. 24. Per Capita Income and Economic Freedom Quartile Least Free ………………... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  24. 25. Growth in Real GDP Per Capita and Economic Freedom Quartile Least Free ……………..…… Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  25. 26. Foreign Direct Investment and Economic Freedom Quartile Least Free ……………...…... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  26. 27. Economic Freedom,the Poor, and Inequality
  27. 28. Economic Freedom,the Poor, and Inequality
  28. 29. Income Share of the Poorest 10% and Economic Freedom Least Free …………….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  29. 30. Per Capita Income of Poorest 10% and Economic Freedom Least Free ……………………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  30. 31. Economic Freedom, Other Freedoms and Democracy
  31. 32. Economic Freedom and Corruption Least Free …………………. Most Free Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, 2006/2007, available at http://www.transparency.org.
  32. 33. Economic Freedom and Political Rights Least Free …………………. Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at http://www.freedomhouse.org/.
  33. 34. Economic Freedom and Civil Liberties Lower ratings indicate higher level of civil liberties Least Free …………………… Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at http://www.freedomhouse.org/.
  34. 35. The impact of Economic Freedom on the UN’s Human Development Index and other indicators of well-being
  35. 36. Human Development Index and Economic Freedom Quartiles Least Free ……………. Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2009, available at http://hdr.undp.org/.
  36. 37. Life Expectancy at Birth and Economic Freedom Quartiles Least Free ……………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  37. 38. Infant Mortality and Economic Freedom Quartile Least Free ………..………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  38. 39. % of Population Using Improved Water Sources Least Free ………………... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  39. 40. Environmental Performance and Economic Freedom Quartile Least Free ………..……….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  40. 41. Conclusions <ul><li>Economic Freedom </li></ul><ul><li>Increases prosperity for all </li></ul><ul><li>Reduces poverty </li></ul><ul><li>Increases other freedoms </li></ul><ul><li>Improves quality of life </li></ul><ul><li>There is increasing global agreement about the need for more economic freedom </li></ul><ul><li>Recent deviations from some aspects of economic freedom will be unlikely to persist in the face of the general move toward more freedom </li></ul>
  41. 42. The impact on economic growth and development
  42. 43. Per Capita Income and Economic Freedom Quartile Least Free ………………... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  43. 44. Growth in Real GDP Per Capita and Economic Freedom Quartile Least Free ……………..…… Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  44. 45. Foreign Direct Investment and Economic Freedom Quartile Least Free ……………...…... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.
  45. 46. The Global Competitiveness Report The Global Competitiveness Index (GCI) … captures the microeconomic and macroeconomic foundations of national competitiveness. We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country. From: www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm
  46. 47. Doing Business <ul><li>Doing Business focuses on 10 topics, with the </li></ul><ul><li>specific aim of measuring the regulation and red </li></ul><ul><li>tape relevant to the life cycle </li></ul><ul><li>Doing Business does not: </li></ul><ul><li>measure all aspects of the business environment that matter to firms or investors. </li></ul><ul><li>assess the strength of the financial system or financial market regulations. </li></ul><ul><li>cover all regulations, or all regulatory goals, in any economy. </li></ul><ul><li>From:www.doingbusiness.org/ </li></ul>
  47. 48. Heritage Economic Freedom Index <ul><li>Subjective rankings </li></ul><ul><li>Cannot be reproduced </li></ul><ul><li>Impossible to tell exactly why a nation received a certain score (unless you are a mind reader) </li></ul><ul><li>Opens the index to political manipulation to suit the political preferences of the authors </li></ul><ul><li>There is evidence this has happened in the past </li></ul><ul><li>The index is getting better </li></ul>
  48. 49. www.freetheworld.com www.fraserinstitute.org
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