1 economic freedom of the world: 2004 annual report fraser institute policy briefing july 15 2004

1

Economic Freedom of the Economic Freedom of the World: 2004 Annual ReportWorld: 2004 Annual Report

Fraser Institute

Policy Briefing July 15

2004

2

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

3

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

20 year project Led by Professor Milton Friedman, Rose

Friedman and Michael WalkerInvolved 100 of the world’s top scholars

4

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 38 government policies affecting

economic freedom based on objective data or independent surveys

A ranking of 123 countries representing 91% 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 62 different countries

5

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

6

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 or third party

data from 123 countries

7

Talk about making a difference …Talk about making a difference …

8

African Research Center for Public Policy and Market African Research Center for Public Policy and Market Process, KenyaProcess, Kenya

Albanian Center for Economic Research (ACER), Albanian Center for Economic Research (ACER), AlbaniaAlbania

Alternate Solutions Institute, PakistanAlternate Solutions Institute, Pakistan

Association for Liberal Thinking, Turkey Association for Liberal Thinking, Turkey

Association pour la Liberté Economique et le Progrès Association pour la Liberté Economique et le Progrès Social (ALEPS), FranceSocial (ALEPS), France

Cato Institute, United States of America Cato Institute, United States of America

Center for the Dissemination of Economic Knowledge Center for the Dissemination of Economic Knowledge (CEDICE), Venezuela (CEDICE), Venezuela

Center for Entrepreneurship and Economic Center for Entrepreneurship and Economic Development (CEED), MontenegroDevelopment (CEED), Montenegro

Center for Free Enterprise, Korea Center for Free Enterprise, Korea

Center for Politiske Studier, DenmarkCenter for Politiske Studier, Denmark

The Center for Research and Communication, The Center for Research and Communication, PhilippinesPhilippines

Centre for Civil Society, India Centre for Civil Society, India

Centre for the New Europe, Belgium Centre for the New Europe, Belgium

Centro Einaudi, ItalyCentro Einaudi, Italy

Centro de Investigación para el Desarrollo A.C., Centro de Investigación para el Desarrollo A.C., MexicoMexico

Centro de Investigación y Estudios Legales (CITEL), Centro de Investigación y Estudios Legales (CITEL), PeruPeru

Centro de Investigaciones Económicas Nacionales, Centro de Investigaciones Económicas Nacionales, GuatemalaGuatemala

Centrum im. Adama Smitha, Poland Centrum im. Adama Smitha, Poland

The Estonian Institute for Open Society Research, The Estonian Institute for Open Society Research, EstoniaEstonia

The F.A. Hayek Foundation, Slovak The F.A. Hayek Foundation, Slovak Republic Republic

The Fraser Institute, Canada The Fraser Institute, Canada

Free Market Centre, SerbiaFree Market Centre, Serbia

The Free Market Foundation of Southern The Free Market Foundation of Southern Africa, South AfricaAfrica, South Africa

Fundación DL, Colombia Fundación DL, Colombia

Fundación Economía y Desarrollo, Inc., Fundación Economía y Desarrollo, Inc., Dominican RepublicDominican Republic

Fundación Libertad, ArgentinaFundación Libertad, Argentina

Fundación Libertad, Panamá Fundación Libertad, Panamá

Fundación Libertad, Democracia y Fundación Libertad, Democracia y Desarrollo, BoliviaDesarrollo, Bolivia

Hong Kong Centre for Economic Hong Kong Centre for Economic Research, Hong KongResearch, Hong Kong

Institute for Advanced Strategic and Institute for Advanced Strategic and Political Studies, IsraelPolitical Studies, Israel

Institute for Market Economics, Bulgaria Institute for Market Economics, Bulgaria

Institute of Business, Trinidad and Institute of Business, Trinidad and TobagoTobago

The Institute of Economic Affairs, Ghana The Institute of Economic Affairs, Ghana

The Institute of Economic Affairs, United The Institute of Economic Affairs, United KingdomKingdom

Institute of Economic Analysis, Russia Institute of Economic Analysis, Russia

Institute of Economic Studies, Iceland Institute of Economic Studies, Iceland

The Institute of Economics, Croatia The Institute of Economics, Croatia

Institute of Public Affairs, Australia Institute of Public Affairs, Australia

Institute of Public Policy Analysis, Institute of Public Policy Analysis, Nigeria Nigeria

Instituto Ecuatoriano de Economía Instituto Ecuatoriano de Economía Política, EcuadorPolítica, Ecuador

Instituto Liberal do Rio de Janeiro, BrazilInstituto Liberal do Rio de Janeiro, Brazil

Instituto Libertad y Desarrollo, ChileInstituto Libertad y Desarrollo, Chile

Instituto para la Libertad y el Análisis de Instituto para la Libertad y el Análisis de Políticas, Costa RicaPolíticas, Costa Rica

Liberales Institut, GermanyLiberales Institut, Germany

Liberales Institut, Switzerland Liberales Institut, Switzerland

Liberální Institut, Czech Republic Liberální Institut, Czech Republic

Lithuanian Free Market Institute, Lithuanian Free Market Institute, LithuaniaLithuania

Making Our Economy Right (MOER), Making Our Economy Right (MOER), BangladeshBangladesh

The Nassau Institute, Bahamas The Nassau Institute, Bahamas

The New Zealand Business Roundtable, The New Zealand Business Roundtable, New ZealandNew Zealand

Open Republic Institute, Ireland Open Republic Institute, Ireland

The Pathfinder Foundation, Sri LankaThe Pathfinder Foundation, Sri Lanka

Romania Think Tank, RomaniaRomania Think Tank, Romania

Scientific Research Mises Center, Scientific Research Mises Center, BelarusBelarus

Society for Disseminating Economic Society for Disseminating Economic Knowledge: "New Economic School-Knowledge: "New Economic School-Georgia," GeorgiaGeorgia," Georgia

Szazadveg Policy Research Center, Szazadveg Policy Research Center, Hungary Hungary

TIGRA®, AustriaTIGRA®, Austria

Timbro, SwedenTimbro, Sweden

The Ukrainian Center for Independent The Ukrainian Center for Independent Political Research, UkrainePolitical Research, Ukraine

D’Letzeburger Land, Luxembourg D’Letzeburger Land, Luxembourg

The Institute for Development of Eco The Institute for Development of Eco nomics and Finance, Indonesianomics and Finance, Indonesia

Bureau d’Analyse d’Ingenierie et de Bureau d’Analyse d’Ingenierie et de Logiciels (BAILO), Ivory CoastLogiciels (BAILO), Ivory Coast

Member Institutes of Economic Freedom of the World Network

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Sample of Press Coverage forFraser Institute’ Economic Freedom of the World 2003Calgary HeraldCalgary HeraldEdmonton JournalEdmonton JournalGlobe and MailGlobe and MailLa PresseLa PresseNational PostNational PostToronto StarToronto StarOttawa CitizenOttawa CitizenOttawa SunOttawa SunEconomistEconomistInfo Bae, ArgentinaInfo Bae, ArgentinaAFX-AsiaAFX-AsiaAsia Pulse (3 article)Asia Pulse (3 article)ChannelnewsAsiaChannelnewsAsiaBahamas PaperBahamas PaperNassau GuardianNassau GuardianNassau TribuneNassau TribuneTribune, BahamasTribune, BahamasBarbados AdvocateBarbados AdvocatePeople's Daily, ChinaPeople's Daily, ChinaSouth China Morning PostSouth China Morning PostXinhua, China (3 articles)Xinhua, China (3 articles)La Republica, Costa Rica La Republica, Costa Rica (2 articles)(2 articles)Portafolio, ColombiaPortafolio, ColombiaEconomia, Costa RicaEconomia, Costa Rica

La Nacion, Costa RicaLa Nacion, Costa RicaLa Republica, Costa RicaLa Republica, Costa RicaLa Nacion, Costa RicaLa Nacion, Costa RicaEl Financiero, EcuadorEl Financiero, EcuadorBaltic News, EuropeBaltic News, EuropeDeutsche Presse-AgenturDeutsche Presse-AgenturWorld Markets, EuropeWorld Markets, EuropeAgence France Presse, FranceAgence France Presse, France (2 articles)(2 articles)Focus, GermanyFocus, GermanyFrankfurterFrankfurterAsia Times, Hong KongAsia Times, Hong KongFactiva, Hong KongFactiva, Hong KongHong Kong ImailHong Kong ImailInter Press Service News Agency,Inter Press Service News Agency, Hong KongHong KongHindu, IndiaHindu, IndiaNationwide International News, Nationwide International News, IndiaIndiaDong-a Ilbo, KoreaDong-a Ilbo, KoreaHankook Ilbo, KoreaHankook Ilbo, KoreaJoongAng Daily, KoreaJoongAng Daily, KoreaKorea TimesKorea TimesKukmin Daily, KoreaKukmin Daily, KoreaKyunghyang Daily News, KoreaKyunghyang Daily News, KoreaMaeil Business Newspaper, Maeil Business Newspaper, KoreaKorea

Segye Times, KoreaSegye Times, KoreaSeoul Economic DailySeoul Economic DailyYonhap News, KoreaYonhap News, KoreaLa Sentinelle, MauritiusLa Sentinelle, MauritiusL'Express, MauritiusL'Express, MauritiusBusiness Story, New Zealand Business Story, New Zealand Dominion Post, New Zealand (2 articles)Dominion Post, New Zealand (2 articles)Evening Standard, New ZealandEvening Standard, New ZealandNational Business Review, New Zealand National Business Review, New Zealand (2 articles)(2 articles)Nelson Mail, New ZealandNelson Mail, New ZealandNew Zealand Herald (3 articlesNew Zealand Herald (3 articles))News, New Zealand News, New Zealand Northern Advocate, New Zealand Northern Advocate, New Zealand Sunday Star Times, New Zealand Sunday Star Times, New Zealand La Prensa, PanamaLa Prensa, PanamaPanama AmericaPanama AmericaAaaii ii-ioaeiaio, RussiaAaaii ii-ioaeiaio, RussiaArehtctbo Muk, RussiaArehtctbo Muk, RussiaHobocth Kutar, RussiaHobocth Kutar, RussiaDanas, SerbiaDanas, SerbiaPregled, SerbiaPregled, SerbiaFactiva, TaiwanFactiva, TaiwanCentral News Agency, TaiwanCentral News Agency, TaiwanLondon TimesLondon TimesChristian Science MonitorChristian Science MonitorReformaReforma

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Introducing the 2004 Economic Introducing the 2004 Economic Freedom of the World Index ResultsFreedom of the World Index Results

12

Overall Economic Freedom Index Overall Economic Freedom Index and the Top Tenand the Top Ten

0 2 4 6 8 10

Score (out of 10)

LuxembourgIreland

CanadaAustralia

Average of Top Ten Switzerland

United StatesUnited Kingdom

New ZealandSingapore

Hong Kong

Source: The Fraser Source: The Fraser Institute.Institute.

13

The top ten and how they got thereThe top ten and how they got there

0

20

40

60

80

100

Perc

entil

e R

anks

Hong Kong

Singapore

New Zealand

Switzerland

United Kingdom

United States

Australia

Canada

Ireland

Luxembourg


14

Countries having significant Countries having significant improvement since 1970improvement since 1970

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Kuwait

Chile

United KingdomEl Salvador

Hungary

Estonia

Uganda

SwedenTrinidad & Tob.

Jamaica


15

Countries having significant Countries having significant deteriorationdeterioration since 1970 since 1970

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Sierra Leone

Barbados

CameroonNepal

Bahamas

Niger

Paraguay

MaliPap. New Guinea

Venezuela


16

Overall Economic Freedom Index Overall Economic Freedom Index and the Bottom Tenand the Bottom Ten

0 2 4 6 8 10

Score (out of 10)

Myanmar

Zimbabwe

Congo, Dem. R.

Central Afr. Rep.

Algeria

Venezuela

Guinea-Bissau

Burundi

Congo, Rep. Of

Russia


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Economic Freedom Over TimeEconomic Freedom Over Time

5.1 5.25.6

6.26.5 6.5

0

2

4

6

8

10

Eco

nom

ic F

reed

om S

core

s

1980 1985 1990 1995 2000 2002


18

Economic Freedom in CanadaEconomic Freedom in Canada

19

Size of Government and the Top Size of Government and the Top TenTen

0 2 4 6 8 10

Score (out of 10)

LuxembourgIreland

AustraliaCanada

New ZealandUnited Kingdom


United StatesSingapore

Hong Kong


20

Size of Government and the Top Size of Government and the Top TenTen

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


21

Legal System and Property Rights Legal System and Property Rights and the Top Tenand the Top Ten

0 2 4 6 8 10

Score (out of 10)

Hong KongIreland

United StatesCanada

Luxembourg


SingaporeNew Zealand

United Kingdom

Australia


22

Legal System and Property Rights, 2000Legal System and Property Rights, 2000(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10

Scor

e (o

ut o

f 10)


8th

23

Legal System and Property Rights, 2002Legal System and Property Rights, 2002(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10Sc

ore

(out

of 1

0)


14th

24

Legal System and Property Rights Legal System and Property Rights and the Top Tenand the Top Ten

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


25

Judiciary Independence, 2000Judiciary Independence, 2000(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10

Scor

e (o

ut o

f 10)


7th

26

Judiciary Independence, 2002Judiciary Independence, 2002(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10

Scor

e (o

ut o

f 10)


15th

27

Judiciary Independence and the Judiciary Independence and the Top TenTop Ten

0

20

40

60

80

100

1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


28

Impartial Courts, 2000Impartial Courts, 2000(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10Sc

ore

(out

of 1

0)


7th

29

Impartial Courts, 2002Impartial Courts, 2002(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10Sc

ore

(out

of 1

0)


21st

30

Impartial Courts and the Top TenImpartial Courts and the Top Ten

0

20

40

60

80

100

1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


31

Sound Money and the Top TenSound Money and the Top Ten

0 2 4 6 8 10

Score (out of 10)

Hong KongNew Zealand

AustraliaCanada

United KingdomAverage of Top

IrelandSingapore

SwitzerlandLuxembourgUnited States


32

Sound Money and the Top TenSound Money and the Top Ten

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


33

Freedom to Trade Internationally Freedom to Trade Internationally and the Top Tenand the Top Ten

0 2 4 6 8 10

Score (out of 10)

AustraliaUnited States

CanadaUnited Kingdom

SwitzerlandNew Zealand

Average of Top Ten Luxembourg

IrelandSingapore

Hong Kong


34

Freedom to Trade Internationally Freedom to Trade Internationally and the Top Tenand the Top Ten

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


35

Regulations and the Top TenRegulations and the Top Ten

0 2 4 6 8 10

Score (out of 10)

IrelandSingapore

CanadaSwitzerland

United KingdomLuxembourg

Average of Top Ten Australia

New ZealandUnited States

Hong Kong


36

Regulations and the Top TenRegulations and the Top Ten

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


37

Credit Market Regulations and Credit Market Regulations and the Top Tenthe Top Ten

0 2 4 6 8 10

Score (out of 10)

SingaporeIreland

SwitzerlandAverage of Top Ten

Hong Kong

AustraliaCanada

United KingdomLuxembourgUnited States

New Zealand


38

Credit Market Regulations and the Credit Market Regulations and the Top TenTop Ten

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


39

Labor Market Regulations and the Labor Market Regulations and the Top TenTop Ten

0 2 4 6 8 10

Score (out of 10)

IrelandSingapore


AustraliaLuxembourg

Average of Top Ten Canada

United KingdomUnited States

Hong Kong


40

Labor Market Regulations and the Labor Market Regulations and the Top TenTop Ten

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


41

Business Regulations and the Business Regulations and the Top TenTop Ten

0 2 4 6 8 10

Score (out of 10)

IrelandUnited Kingdom

CanadaLuxembourgUnited States

Average of Top Ten Australia


Singapore

Hong Kong


42

Business Regulations, 2000Business Regulations, 2000(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10Sc

ore

(out

of 1

0)


8th

43

Business Regulations, 2002Business Regulations, 2002(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10Sc

ore

(out

of 1

0)


9th

44

Business Regulations and the Top Business Regulations and the Top TenTen

0

20

40

60

80

100

1995 2000 2001 2002

Perc

entil

e R

anks

Australia

Canada

Hong Kong

Ireland

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top Ten


45

Irregular Payments, 2000Irregular Payments, 2000(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10Sc

ore

(out

of 1

0)


6th

46

Irregular Payments, 2002Irregular Payments, 2002(High Income OECD Countries)(High Income OECD Countries)

0

2

4

6

8

10

Scor

e (o

ut o

f 10)


17th

47

Canada’s Score 2000 vs 2002Canada’s Score 2000 vs 2002Selected IndicatorsSelected Indicators

0

2

4

6

8

10

Scor

e (o

ut o

f 10)

JudiciaryIndependence

ImpartialCourts

Legal System& Property

Rights

IrregularPayments

BusinessRegulations

2000

2002


48

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

49

The impact on economic The impact on economic growth and developmentgrowth and development

50

Income (per person) of the Income (per person) of the Bottom TenBottom Ten

0 10,000 20,000 30,000 40,000 50,000 60,000

GDP per Capita, 2002 (ppp)

BurundiCongo, Dem. R.Guinea-Bissau Congo, Rep. Of

Central Afr. Rep.Togo

ZimbabweVenezuela

AlgeriaRussia

Sources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

51

Income (per person) of the Top TenIncome (per person) of the Top Ten

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

GDP per Capita, 2002 $US (ppp)

New ZealandSingapore

United KingdomHong Kong

AustraliaCanada

SwitzerlandUnited States

IrelandLuxembourg


(Online).(Online).

52

Per Capita Income and Economic Per Capita Income and Economic Freedom QuintileFreedom Quintile

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

GD

P P

er

Cap

ita,

pp

p

US

$,

2002

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free …….. Most FreeLeast Free …….. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

53

Growth in Real GDP Per Capita Growth in Real GDP Per Capita and Economic Freedom Quintileand Economic Freedom Quintile

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

GD

P P

er

Cap

ita %

Gro

wth

,

1993-2

002

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free ……………..….. Most FreeLeast Free ……………..….. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

54

New Research:New Research:

Economic Freedom, Economic Freedom, Investment, and GrowthInvestment, and Growth

55

Regressions: Economic Freedom and the Regressions: Economic Freedom and the Productivity of InvestmentProductivity of Investment

0.190.21

0.27 0.27

0.330.35

0.0

0.1

0.2

0.3

0.4

0.5

Perc

enta

ge P

oint

Cha

nge

EFW < 5 5 < EFW < 7 EFW > 7

Change in economic growth (1980-2000) per unit difference in Private I/GDP

Change in economic growth (1980-2000) per unit difference in Private I/GDP (LDCs only)


56

Regressions: Changes in Economic Freedom and Regressions: Changes in Economic Freedom and Economic GrowthEconomic Growth

1.00

1.28

0.58

1.52

1.90

0.82

0.2

0.7

1.2

1.7

2.2

Per

cen

tag

e P

oin

ts

Direct Impact Total Impact

Impact of a one-unit difference in the 1980 EFW rating on growth of GDP per capita, 1980-2000.

Impact of a one-unit change in EFW in the 1980s on growth of GDP per capita, 1980-2000.

Impact of a one-unit change in EFW in the 1990s on growth of GDP per capita, 1980-2000.


57

Economic Freedom and Investment Economic Freedom and Investment Per Worker, 1980-2000Per Worker, 1980-2000

$845$68

$3,319

$444

$10,871

$3,117

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

US

Do

llars

EFW < 5 5 < EFW < 7 EFW > 7

Investment per worker, 1980-2000 (US$)

Foreign direct investment per worker, 1980-2000 (US$)


58

Economic Freedom and Total and Private Economic Freedom and Total and Private Investment as a Share of GDPInvestment as a Share of GDP

9.6

18.6

14.2

21.3

18.0

22.8

0

5

10

15

20

25

Per

cent

EFW < 5 5 < EFW < 7 EFW > 7

Private investment, 1980-2000 (% of GDP)

Total investment, 1980-2000 (% of GDP)


59

Economic Freedom and Growth in Economic Freedom and Growth in Per Capita GDP, 1980-2000Per Capita GDP, 1980-2000

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Pe

rce

nt

EFW < 5 5 < EFW < 7 EFW > 7

Average Annual Growth Rate of Per Capita GDP ($US 1995)


60

Economic Freedom,the Poor, andEconomic Freedom,the Poor, andInequalityInequality

61

Human Poverty Index, 2001, and Human Poverty Index, 2001, and Economic Freedom QuintileEconomic Freedom Quintile

0

5

10

15

20

25

30

35

40

Hu

ma

n P

ov

ert

y I

nd

ex

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free …………..…. Most FreeLeast Free …………..…. Most FreeSources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2003 (Online), http://hdr.undp.org/reports/global/2003/indicator/index.html

(accessed on June 16, 2004).

62

Income Inequality, 1998-2002Income Inequality, 1998-2002

0

10

20

30

40

50

60

Perc

en

tag

e

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Poorest 20% 2nd 20% 3rd 20% 4th 20% Richest 20%

Least Free …….. Most Free Least Free …….. Most Free

Percent of income accruing to thePercent of income accruing to the


(Online).(Online).

63

Income Share of the Poorest Income Share of the Poorest 10% and Economic Freedom10% and Economic Freedom

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Inco

me S

hare

Held

by

Lo

west

10%

, 1997-2

002

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free …….. Most FreeLeast Free …….. Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004(Online).(Online).

64

Per Capita Income of Poorest 10% Per Capita Income of Poorest 10% and Economic Freedomand Economic Freedom

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Bottom Quintile Fourth Quintile Third Quintile Second Quintile Top Quintile

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Income of the lowest 10%, 1997-2002

Income share held by lowest 10%, 1997-2002

Least Free …….. Most Free Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

65

Economic Freedom, Economic Freedom, Other Freedoms and Other Freedoms and DemocracyDemocracy

66

Economic Freedom Versus CorruptionEconomic Freedom Versus Corruption10 =highly corrupt and 0 =highly clean10 =highly corrupt and 0 =highly clean

0

2

4

6

8

10

Co

rru

pti

on

Ra

tin

g

(o

ut

of

10

)

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free ………….. Most FreeLeast Free ………….. Most Free Sources: The Fraser Institute; Transparency International, Corruption Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index 2003 (Online).Perceptions Index 2003 (Online).

67

Political Stability and Economic Political Stability and Economic Freedom QuintileFreedom Quintile

0

2

4

6

8

10

Bottom 20% 2nd Quintile 3rd Quintile 4th Quintile Top 20%

Least Free ………..… Most FreeLeast Free ………..… Most Free

68

Economic Freedom and Political RightsEconomic Freedom and Political Rights ten representing the highest degree of political rights ten representing the highest degree of political rights

and zero the lowestand zero the lowest

0

2

4

6

8

10

Po

liti

ca

l R

igh

ts

(o

ut

of

10

)

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free …… Most FreeLeast Free …… Most Free

Sources: The Fraser Institute; Freedom House, Sources: The Fraser Institute; Freedom House, Freedom in the World Country Freedom in the World Country Ratings, 1973-2003Ratings, 1973-2003 (Online). (Online).

69

Economic Freedom and Civil LibertiesEconomic Freedom and Civil Libertiesten representing the highest degree of civil liberties ten representing the highest degree of civil liberties

and zero the lowestand zero the lowest

0

2

4

6

8

10

Civ

il L

ibert

ies

(ou

t o

f 10)

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free …… Most FreeLeast Free …… Most Free Sources: The Fraser Institute; Freedom House, Sources: The Fraser Institute; Freedom House, Freedom in the World Country Freedom in the World Country Ratings, 1973 to 2003Ratings, 1973 to 2003 (Online). (Online).

70

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

71

Human Development Index, 2001, Human Development Index, 2001, and Economic Freedom Quintilesand Economic Freedom Quintiles

0.0

0.2

0.4

0.6

0.8

1.0

Un

ite

d N

ati

on

s

Hu

ma

n D

ev

elo

pm

en

t In

de

x, 2

00

1

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free ……………. Most FreeLeast Free ……………. Most FreeSources: The Fraser Institute; United Nations Development Programmme, Human Sources: The Fraser Institute; United Nations Development Programmme, Human

Development Indicators 2003 (Online), Development Indicators 2003 (Online), available at http://www.undp.org/hdr2003/indicator/index_indicators.html (accessed on June 15, 2004).

72

Life Expectancy at Birth and Life Expectancy at Birth and Economic Freedom QuintilesEconomic Freedom Quintiles

0

20

40

60

80

Ye

ars

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

Top Quintile

Least Free ……………. Most FreeLeast Free ……………. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

73

Infant Mortality and Economic Infant Mortality and Economic Freedom QuintileFreedom Quintile

0

20

40

60

80

100

Per

1,0

00 li

ve b

irth

s, 2

002

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free ………..…. Most FreeLeast Free ………..…. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

74

Adult Mortality (2000) and Adult Mortality (2000) and Economic Freedom QuintileEconomic Freedom Quintile

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Pro

bab

ility

of d

yin

g b

etw

een

th

e ag

es 1

5 an

d 6

0

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free ………..…. Most FreeLeast Free ………..…. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

75

Economic Freedom and Labor force, Economic Freedom and Labor force, children 10-14 (% of age group)children 10-14 (% of age group)

0

5

10

15

20

25

Perc

en

tag

e o

f ch

ild

ren

10-1

4 w

ho

are

in

th

e

lab

ou

r fo

rce

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free ……………. Most FreeLeast Free ……………. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

76

Access to Essential Drugs, 1999, Access to Essential Drugs, 1999,

and Economic Freedom Quintilesand Economic Freedom Quintiles

0

20

40

60

80

100

% o

f p

op

ula

tio

n w

ith

ac

ce

ss

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free …………..Most FreeLeast Free …………..Most FreeSources: The Fraser Institute; United Nations Development Programmme, Human Sources: The Fraser Institute; United Nations Development Programmme, Human

Development Indicators 2002 (Online), available at Development Indicators 2002 (Online), available at

http://hdr.undp.org/reports/global/2002/en/indicator/indicator.cfm?File=index.html (accessed on June 17, 2004)(accessed on June 17, 2004)

77

% of Population Using Improved % of Population Using Improved Water Sources, 2000Water Sources, 2000

0

20

40

60

80

100

Perc

en

tag

e

BottomQuintile

FourthQuintile

ThirdQuintile

SecondQuintile

TopQuintile

Least Free …………….. Most FreeLeast Free …………….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004Sources: The Fraser Institute; The World Bank, World Development Indicators 2004

(Online).(Online).

78

ConclusionsConclusionsEconomic Freedom spurs

Increased prosperity for allPoverty reductionOther freedomsReduces Probability of WarQuality of life improvements

All this can be seen in today’s data All this can be seen in today’s data and lessons from historyand lessons from history

79

www.freetheworld.comwww.freetheworld.com

www.fraserinstitute.cawww.fraserinstitute.ca

1 economic freedom of the world: 2004 annual report fraser institute policy briefing july 15 2004

Documents

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index of economic freedom

economic freedom individuals

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