Economic Freedom, Larger Freedoms and State Intervention

2008

What is the relationship between economic freedom and larger freedoms? Arguably, if economic freedom (EF) promotes growth and if it trickles down EF promotes larger freedoms (e.g. a healthy and productive life, free from want and deprivation). However, higher EF by definition entails lower government interventions in sectors such as health and education, thereby curtailing some aspects of larger freedoms. Thus ambiguity exists with respect to the effect of EF on larger freedoms. Therefore, the basic objective of the paper is to examine how various aspects of economic freedom impinge on larger freedoms. The econometric analysis suggests that higher levels of EF promote not only higher levels of GDP per capita but also impact larger freedoms favourably. However, results also confirm that higher levels of EF associated with few of its sub-components, particularly lower government consumption expenditures and lower transfers and subsidies, affect larger freedoms adversely. Since the rol...

Kyklos, 2002

Proceedings of the international conference "Economic and Business Trends Shaping the Future", 2020

The impact of formal institutions, including rule of law, human rights, and civil liberties on economic growth has been in the focus of the latest research agenda of the new institutional economics due to the current pandemic of the Corona-19 virus. Some limitations are necessary to be imposed to address a pandemic, but this is a real risk of lasting deterioration in basic human freedoms. Increased surveillance, restrictions on free expression and information, and limits on public participation are becoming increasingly common. The present fear is that the authorities worldwide are using the current situation to repress human rights for political purposes. This paper aims to explore the effect of the overall institutional environment, understood as the concept of human freedom, on economic prosperity in different jurisdictions around the world. Human freedom is a general term for personal, civil, and economic freedom and therefore the interconnection with economic growth can be seen...

Competitio, 2010

This paper, relying on a conceptualization of economic freedom in terms of kinds of government actions, develops a new measure of economic freedom. However, this is not art for art’s sake; instead, it allows us to provide an explanation for how particular institutions of economic freedom enhance economic development, a view upon which scholars agree. We develop two concepts related to economic freedom, namely the freedom-compatible and freedom-non-compatible institutions and use them as tools in an analysis of the process of economic growth, especially the relationship between economic freedom and long-run income. The major argument is that freedom-compatible institutions are primary determinants of income, while freedom-non-compatible institutions depend upon them and are partly the outcomes of the growth process itself, a fact which is explained by the Misesian theory of interventionism. Our regression analyses support our theoretical insights. JEL Classification: B53, H10, O10

The objective of the study is to investigate the relationship between economic growth and economic freedom for different income groups. Therefore, the data were collected from 94 different countries belonging to five different income groups in order to cover the period from 2000 to 2010. In the study, relationship between the economic growth of the country and the level of freedom index which Fraser Institute measured and its sub-components constituting was questioned through the panel data analysis method. As a result of the analyses, it was found that there is a statistically significant positive relationship between the level of economic freedom for all income groups and economic growth. With the inclusion of sub-components of freedom index into the model, the effects of such sub-components vary depending on the income groups.

The basic objective of the paper is to focus on the role of economic freedom and inequality in education and land assets as determinants of income inequality and growth. The econometric results confirm that for the countries studied, while the aggregate measure of economic freedom does not have a significant effect on the income equality, a higher economic freedom, as measured by one of its sub-components i.e., a lower size of the government affects equality adversely. While increasing the size of the government necessarily reduces inequality, its impact on growth is ambiguous. In light of this relationship, and taking note of the threshold effects of economic freedom on growth, the paper questions the desirability of a reduced size of the government in attaining growth with equity. Emphasizing that government investment in providing equality is necessary, the paper argues that the role of the government, in an era of liberalization and privatization, needs to be redefined rather than reduced.

2007

This paper seeks to bring a better understanding of the relationship between economic growth and the disaggregated factors which constitute the elements of economic freedom. The two main objectives of this paper are to: (1) based on the Solow augmented growth model, test which of the elements of economic freedom demonstrate a statistically significant relationship to economic growth; and (2) establish which way the main causality direction between economic freedom and growth runs from. Finally, we identify desirable directions for further research and policy implications.

2008

Altman (2007) examines the impact of economic freedom, including its various component parts, on aggregate economic performance across countries. He claims that some of the component parts of economic freedom, measured primarily with the Economic Freedom of the World index, are correlated positively with higher levels of per capita income and growth while others are not. He also attempts to identify "threshold effects" within the data that indicate differential impacts of economic freedom on economic performance at different levels. Although both questions are worthwhile, ultimately his efforts are unconvincing for both theoretical and empirical reasons which we discuss. The authors would like to thank John Conley and an anonymous referee for helpful comments. The usual disclaimer applies.

Public Choice, 2002

Most studies of the relation between economic freedom andgrowth of GDP have found a positive relation. One problem inthis area is the choice of economic freedom measure. A singlemeasure does not reflect the complex economic environment anda highly aggregated index makes it difficult to draw policyconclusions. In this paper we investigate what specific typesof economic freedom measures that are important

Freedom is argued by some to have instrumental as well as intrinsic value. Economic and political freedoms are argued to have effects on various economic outcomes in previous research. The definition of freedom is unclear and implied by the components of the economic or political freedom index used in the study. Although the concept of freedom continues to be debated and contested, this thesis employs Isaiah Berlin’s dichotomy of positive and negative freedom. Berlin defines negative freedom as freedom from government and coercion and positive freedom as the ability to participate in the governance of oneself. This study indicates that the effects of negative and positive freedom on economic growth are statistically non-significant. The human development model is sensitive to the inclusion of property rights and thus not stable. Both positive and negative freedoms have a positive, statistically significant and robust relationship with reductions in absolute poverty.