History of the World in 25 Slides

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With convincing graphs and excerpts from research, Jacob Lundberg investigates a range of causalities and developments in modern world history, including the link between economic freedom and economic growth, and the positive effects of economic growth.

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History of the World in 25 Slides

  1. 1. The Case for Global Capitalism Jacob Lundberg Umeå University 16 March 2010
  2. 2. 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.” </li></ul>
  3. 3. Economic Freedom of the World <ul><li>Size of government: expenditures, taxes, and enterprises </li></ul><ul><li>Legal structure and security of property rights </li></ul><ul><li>Access to sound money </li></ul><ul><li>Freedom to trade internationally </li></ul><ul><li>Regulation of credit, labor and business </li></ul>
  4. 4. Economic freedom gives prosperity
  5. 5. Economic Freedom of the World
  6. 6. <ul><li>” The dynamic relationships estimated strongly suggest that economic freedom fosters economic growth . To our knowledge, this causal link appears as an empirical regularity in most of the literature addressing the subject .” </li></ul><ul><li>Vega-Gordillo, Manuel & Álvarex-Arce, José L. (2002), ”The Chicken and the Egg: Economic Growth and Freedom”, Círculo de Empresarios <http://www.freetheworld.com/papers/Vega-Gordillo_and_Alvarex-Arce.pdf> </li></ul>
  7. 7. <ul><li>” Our empirical results confirm the strong relationship that many papers posit between economic freedom and economic development . … both property rights and economic freedom are .. effective in promoting economic growth in [rich] countries.” </li></ul><ul><li>Khalil, Mahmoud, Ellaboudy, Shereef & Denzau, Arthur (2007), ”The Institutions and Economic Development in the OECD”, International Research Journal of Finance and Economics 2007 (12) <http://www.eurojournals.com/irjfe%2012%20mahm.pdf> </li></ul>
  8. 8. <ul><li>” It was shown in this paper the economic freedom – economic growth literature is so affected by publication bias that it is not clear what the size of the genuine effect of economic freedom on economic growth is. This does not mean there is no economic freedom – economic growth association. The evidence is indicative of a positive impact on economic growth. ” </li></ul><ul><li>Doucouliagos, Chris (2005), ”Publication bias in the economic freedom and economic growth literature” in Roberts, Colin J. & Stanley, T. D., Meta-regression analysis: issues of publication bias in economics (Wiley-Blackwell) </li></ul>
  9. 9. <ul><li>” Economic freedom enhances growth in [poor countries] by two channels: directly, as it has already been shown in the literature, and indirectly, by increasing the [foreign investment] that a country attracts. Increasing economic freedom should therefore be a key priority of policy makers. ” </li></ul><ul><li>Bengoa, Marta & Sanchez-Robles, Blanca (2003), &quot;Foreign direct investment, economic freedom and growth: new evidence from Latin America&quot;, European Journal of Political Economy 19 <http://www.ciberoamericana.unican.es/documentos/Bengoa%20y%20S%C3%A1nchez-Robles%20%5B2003%5D.pdf> </li></ul>
  10. 10. <ul><li>” The results suggest that the overall level of economic freedom appears to cause growth , while changes in freedom are jointly determined with growth.” </li></ul><ul><li>Dawson, John W. (2003), &quot;Causality in the freedom–growth relationship&quot;, European Journal of Political Economy 19 <http://www.appstate.edu/~dawsonjw/ejpefinal.pdf> </li></ul>
  11. 11. <ul><li>” Empirical research has shown that both more economic freedom and a higher stability of policy variables are supportive for economic growth . Thus, the path of policy liberalization may have a considerable influence on a nation's growth performance.” </li></ul><ul><li>Pitlik, Hans (2002), &quot;The Path of Liberalization and Economic Growth&quot;, Kyklos 55, p. 57-80 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=309278> </li></ul>
  12. 12. Economic freedom Source: Economic Freedom of the World Weighted average for 86 percent of world population, on a scale 0 – 10.
  13. 13. World GDP per capita Source: Angus Maddison, IMF
  14. 14. World poverty projections Source: World Bank
  15. 15. Nondemocracies are poor Nondemocracies Democracies Oil states Sources: Freedom House, IMF
  16. 16. Democracy Source: Freedom House Average score on a scale 1 – 7 on political rights and civil liberties
  17. 17. Democracies don’t fight each other 1816–2005. Source: Rudolph Rummel 0 democracy vs. democracy 166 democracy vs. nondemocracy 205 nondemocracy vs. nondemocracy Source: Bruce Russett 0 of which between democracies 71 wars since 1815 Source: Huth & Allee 0 of which wars 5 of which between democracies 348 territorial disputes 1919–1995 Source: Frank Wayman 0 of which wars 62 of which between democracies 2042 disputes 1816–1992
  18. 18. War deaths Source: Human Security Report 2010 deaths per million people
  19. 19. Violence is declining <ul><li>” The most important and most underappreciated trend in the human saga: Violence has been in decline over long stretches of history, and today we are probably living in the most peaceful moment of our species' time on earth… </li></ul><ul><li>If the wars of the twentieth century had killed the same proportion of the population that die in the wars of a typical tribal society, there would have been two billion deaths, not 100 million.” </li></ul><ul><li>Steven Pinker, Harvard psychologist </li></ul>
  20. 20. Strong correlation health/wealth Source: Gapminder
  21. 21. World life expectancy is rising Source: Indur Goklany, WHO
  22. 22. Access to safe water is improving Source: World Bank &quot;Improved water sources include household connections, public standpipes, boreholes, protected dug wells, protected springs, and rainwater collections. … at least 20 liters per person per day from a source within one kilometer of the user’s dwelling.”
  23. 23. Rich people are happy people
  24. 24. Summary Economic growth Democracy Economic freedom
  25. 25. Thank you! <ul><li>[email_address] </li></ul>Youth of the Moderate Party Västerbotten County Moderate Party Students Umeå University

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