1 Economic Freedom of the World: 2006 Annual Report Fraser Institute Policy Briefing September 7, 2006 Mark Mullins, Executive Director Amela Karabegovic,

1

Economic Freedom of the Economic Freedom of the World: 2006 Annual ReportWorld: 2006 Annual Report

Fraser InstitutePolicy Briefing

September 7, 2006

Mark Mullins, Executive Director

Amela Karabegovic, Senior Research Economist

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 60 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 130 countries representing 93% 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 71 different countries

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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

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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 for 130 countries

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

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Albanian Center for Economic Albanian Center for Economic Research, AlbaniaResearch, 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, BulgariaBulgariaCambodia Institute of Development Cambodia Institute of Development Study, Cambodia Study, Cambodia The Fraser Institute, CanadaThe Fraser Institute, CanadaInstituto Libertad y Desarrollo, ChileInstituto Libertad y Desarrollo, ChileILP- Instituto Libertad y Progreso, ILP- Instituto Libertad y Progreso, 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, Ecuador International University Concordia Audentes, Audentes University, EstoniaAssociation pour la Liberté Economique et le Progrès Social (ALEPS), France

Alternate Solutions Institute, PakistanAlternate Solutions Institute, PakistanFundación Libertad, PanamaFundación Libertad, PanamaCentro de Investigación y Estudios Centro de Investigación y Estudios Legales (CITEL), PeruLegales (CITEL), PeruThe Center for Research and The Center for Research and Communication, PhilippinesCommunication, 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, RussiaThe F.A. Hayek Foundation, Slovak The F.A. Hayek Foundation, Slovak RepublicRepublicThe Free Market Foundation of Southern The Free Market Foundation of Southern Africa, South AfricaAfrica, South AfricaPathfinder FoundationPathfinder Foundation , Sri Lanka, Sri LankaInternational Research Foundation (IRF), International Research Foundation (IRF), Sultanate of OmanSultanate of OmanTimbro, SwedenTimbro, SwedenLiberales Institut, SwitzerlandLiberales Institut, SwitzerlandArthur Lok Jack Graduate School of Arthur Lok Jack Graduate School of Business, The University of the West Business, The University of the West Indies, Trinidad, W.I.Indies, Trinidad, W.I.Association for Liberal Thinking, TurkeyAssociation for Liberal Thinking, TurkeyThe Ukrainian Center for Independent The Ukrainian Center for Independent Political Research, UkrainePolitical Research, UkraineThe Institute of Economic Affairs, United The Institute of Economic Affairs, United KingdomKingdomCATO Institute, USACATO Institute, USAThe Centre for the Dissemination of The Centre for the Dissemination of Economic Knowledge (CEDICE), VenezuelaEconomic Knowledge (CEDICE), VenezuelaResearch Center for Entrepreneurship Research Center for Entrepreneurship and Development Policies, Vietnamand Development Policies, VietnamFree Market Center (FMC), YugoslaviaFree Market Center (FMC), YugoslaviaZambia Institute for Public Policy Analysis Zambia Institute for Public Policy Analysis (ZIPPA), Zambia(ZIPPA), Zambia

Member Institutes of Economic Freedom of the World Network

Society for Disseminating Economic Knowledge:“New Economic School – Georgia”, GeorgiaLiberales Institut, GermanyThe Institute of Economic Affairs, GhanaCentro de Investigaciones Económicas Nacionales, GuatemalaInstitut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), HaitiHong Kong Centre for Economic Research, Hong KongSzazadveg Foundation, HungaryCentre for Social and Economic Research, IcelandCentre for Civil Society, IndiaThe Institute for Development of Economics and Finance, IndonesiaOpen Republic Institute, IrelandInstitute for Advanced Strategic and Political Studies, IsraelCentro Einaudi, ItalyBureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory CoastAfrican Research Center for Public Policy and Market Process, KenyaCenter for Free Enterprise, KoreaEconomic Policy Institute-Bishkek Consensus, Kyrgyz RepublicLithuanian Free Market Institute, LithuaniaD'Letzeburger Land, LuxembourgCentro de Investigación para el Desarrollo A.C., MexicoOpen Society Forum, MongoliaThe Center for Entrepreneurship and Economic Development, MontenegroThe New Zealand Business Roundtable, New ZealandInstitute of Public Policy Analysis, NigeriaCivita – Center for Business and Society Incorporated, Norway

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Sample of Press Coverage forFraser Institute’ Economic Freedom of the World 2005

All Africa, AfricaAll Africa, AfricaAsia Pulse, AustraliaAsia Pulse, AustraliaAustralian Financial Review, Australian Financial Review, AustraliaAustraliaScoop, AustraliaScoop, AustraliaLatin America News Digest, Latin America News Digest, BrazilBrazilCapital Weekly, BulgariaCapital Weekly, BulgariaEl Diario de Hoy, Central El Diario de Hoy, Central AmericaAmericaDiario Financiero, ChileDiario Financiero, ChileEl Financiero, ChileEl Financiero, ChileXinhua News Agency, ChinaXinhua News Agency, ChinaSouth China Morning Post, South China Morning Post, ChinaChinaChina Daily-Hong Kong China Daily-Hong Kong Edition, ChinaEdition, ChinaAmbiito Juridico, ColombiaAmbiito Juridico, ColombiaPortafolio, ColombiaPortafolio, ColombiaLa Prensa Libre, Costa RicaLa Prensa Libre, Costa RicaEl Financiero, Costa RicaEl Financiero, Costa RicaHina, CroatiaHina, CroatiaHospodarske Noviny, Czech Hospodarske Noviny, Czech RepublicRepublicBorsen, DenmarkBorsen, Denmark

Times of Oman, OmanTimes of Oman, OmanDaily times, PakistanDaily times, PakistanRzeczpospolita, PolandRzeczpospolita, PolandLa Tribune, CanadaLa Tribune, CanadaMontreal Gazette, CanadaMontreal Gazette, CanadaRumanian, RomaniaRumanian, RomaniaSt. Petersburg Times, RussiaSt. Petersburg Times, RussiaMoscow Times, RussiaMoscow Times, RussiaInterfax, RussiaInterfax, RussiaRussian Publication, RussiaRussian Publication, RussiaPlenipotentiary, RussiaPlenipotentiary, RussiaRepublika, Serbia/MontenegroRepublika, Serbia/MontenegroVijesti, Serbia/MontenegroVijesti, Serbia/MontenegroPobjeda, Serbia/MontenegroPobjeda, Serbia/MontenegroStraits Times, SingaporeStraits Times, SingaporeEkonomicka Sloboda, SlovakiaEkonomicka Sloboda, SlovakiaHodin Daily, SlovakiaHodin Daily, SlovakiaPravda Daily, SlovakiaPravda Daily, SlovakiaBusiness Day, South AfricaBusiness Day, South AfricaEl Economista, SpainEl Economista, SpainLibertad Digital, SpainLibertad Digital, SpainL'Agefl Suisse, SwitzerlandL'Agefl Suisse, SwitzerlandBangkok Post, ThailandBangkok Post, ThailandTrinidad Guardian, Trinidad & TobagoTrinidad Guardian, Trinidad & TobagoFinancial Times, UKFinancial Times, UKInvestor's Business Daily, USInvestor's Business Daily, USFinancial Times, USFinancial Times, USEl Nacional, VenezuelaEl Nacional, Venezuela

Jyllands-Posten, DenmarkJyllands-Posten, DenmarkBaltic Business Weekly, EstoniaBaltic Business Weekly, EstoniaBBC Monitoring, EuropeBBC Monitoring, EuropeRadio Liberty, GeorgiaRadio Liberty, GeorgiaFrankfurter Allgemeine, GermanyFrankfurter Allgemeine, GermanyVereinigte, GermanyVereinigte, GermanyFinancial Express, IndiaFinancial Express, IndiaHindustan Times, IndiaHindustan Times, IndiaJournal of Commerce, InternationalJournal of Commerce, InternationalEl Cronista Comercial, InternationalEl Cronista Comercial, InternationalEl Nacional, InternationalEl Nacional, InternationalInternational Herald Tribune, International Herald Tribune, InternationalInternationalIsrael Business Arena, IsraelIsrael Business Arena, IsraelJerusalem Post, IsraelJerusalem Post, IsraelItaliaOggi, ItalyItaliaOggi, ItalyIl Sole, ItalyIl Sole, ItalyIl Giornale, ItalyIl Giornale, ItalyKorea Times, KoreaKorea Times, KoreaSeoul Daily, KoreaSeoul Daily, KoreaKorea Herald, KoreaKorea Herald, KoreaNoticias Latinoamericanas, MexicoNoticias Latinoamericanas, MexicoAgencia Mexicanan De Noticias, Agencia Mexicanan De Noticias, MexicoMexicoRepublika, MontenegroRepublika, MontenegroFinancial Times Deutschland, Financial Times Deutschland, NetherlandsNetherlandsDominion Post, New ZealandDominion Post, New Zealand

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Introducing the 2006 Economic Introducing the 2006 Economic Freedom of the World Index ResultsFreedom of the World Index Results

12

Overall Economic Freedom Index Overall Economic Freedom Index and the Top 10and the Top 10

0 2 4 6 8 10

Score (out of 10)

Iceland

Luxembourg

Canada

Ireland

United Kingdom

Average of Top 10

New Zealand

Switzerland

United States

Singapore

Hong Kong

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

13

The top 10 and how they got thereThe top 10 and how they got there

0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


14

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

0

20

40

60

80

100

Perc

entil

e R

anks

Uganda

Jamaica

EstoniaSweden

Israel

El Salvador

United Kingdom

HungaryKuwait

Chile


15

Countries having significant Countries having significant deteriorationdeterioration since 1970 since 1970

0

20

40

60

80

100

Perc

entil

e R

anks

Venezuela

Pap. New Guinea

Dominican Rep.

Mali

Nepal

Cameroon

Niger

Paraguay

Malawi

Bahrain


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)

Zimbabwe

Myanmar

Congo, Dem. R.

Congo, Rep. Of

Venezuela

Algeria

Guinea-Bissau

Burundi

Central Afr. Rep.

Rwanda


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Economic Freedom Over TimeEconomic Freedom Over Time

5.75.2 5.1 5.2 5.5

5.96.4 6.4 6.4 6.4 6.5

0

2

4

6

8

10

Eco

nom

ic F

reed

om S

core

1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004


18

Economic Freedom Over Time Adjusted Economic Freedom Over Time Adjusted for Populationfor Population

5.54.9 4.8 5.0 5.1

5.66.2 6.2 6.2 6.3 6.3

0

2

4

6

8

10

Eco

nom

ic F

reed

om S

core

1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004


19

Economic Freedom and the Top 10Economic Freedom and the Top 10

20

Size of Government and the Top 10Size of Government and the Top 10

0 2 4 6 8 10

Score (out of 10)

Luxembourg

Ireland

Canada

United Kingdom

New Zealand

Iceland

Average of Top 10

Switzerland

United States

Singapore

Hong Kong


21


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


22


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


23

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)

Hong Kong

United States

Singapore

Canada

Average of Top 10

Luxembourg

Switzerland

Ireland

United Kingdom

Iceland

New Zealand


24


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


25


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


26

Sound Money and the Top 10Sound Money and the Top 10

0 2 4 6 8 10

Score (out of 10)

Iceland

Hong Kong

United Kingdom

Average of Top 10

New Zealand

Canada

Singapore

Luxembourg

Switzerland

Ireland

United States


27


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


28


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


29

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)

Iceland

United States

Switzerland

Canada

United Kingdom

New Zealand

Average of Top 10

Ireland

Luxembourg

Singapore

Hong Kong


30


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


31


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


32

Regulations and the Top 10Regulations and the Top 10

0 2 4 6 8 10

Score (out of 10)

Ireland

Luxembourg

Singapore

United Kingdom

Switzerland

Average of Top 10

Canada

New Zealand

United States

Hong Kong

Iceland


33


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


34


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


35

Credit Market Regulations Credit Market Regulations and the Top 10and the Top 10

0 2 4 6 8 10

Score (out of 10)

Singapore

Ireland

Switzerland

Hong Kong

Average of Top 10

Canada

Luxembourg

Iceland

United Kingdom

United States

New Zealand


36


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


37


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


38

Labor Market Regulations Labor Market Regulations and the Top 10and the Top 10

0 2 4 6 8 10

Score (out of 10)

Luxembourg

Ireland

New Zealand

Singapore

United Kingdom

Canada

Average of Top 10

Switzerland

United States

Iceland

Hong Kong


39


0

2

4

6

8

101970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004

Scor

e (o

ut o

f 10)

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


40


0

20

40

60

80

100

Perc

entil

e R

anks

Canada

Hong Kong

Iceland

Ireland

Luxembourg

New Zealand

Singapore

Switzerland

United Kingdom

United States

Average of Top 10


41

Business Regulations Business Regulations and the Top 10and the Top 10

0 2 4 6 8 10

Score (out of 10)

United Kingdom

United States

Switzerland

Luxembourg

Ireland

Canada

Average of Top 10

Hong Kong

New Zealand

Singapore

Iceland


42

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

43

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

44

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, 2004 (ppp)

BurundiCongo, Dem. Rep.

Guinea-BissauCongo, Rep.

Central African RepublicRwanda

TogoZimbabwe

Venezuela, RBAlgeria

Sources: The Fraser Institute; The World Bank, World Development Sources: The Fraser Institute; The World Bank, World Development Indicators Indicators CD-ROM, 2006.CD-ROM, 2006.

45

Income (per person) of the Top 10Income (per person) of the Top 10

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

GDP per Capita, 2004 (ppp)

New ZealandSingapore

United KingdomHong Kong, China

CanadaSwitzerland

IcelandIreland

United StatesLuxembourg

Sources: The Fraser Institute; The World Bank, World Development Indicators Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2006.CD-ROM, 2006.

46

Per Capita Income and Economic Per Capita Income and Economic Freedom QuartileFreedom Quartile

$0

$5,000

$10,000

$15,000

$20,000

$25,000

GD

P P

er C

apit

a (p

pp

), 2

003

Least FreeQuartile

3rd Quartile 2nd Quartile Most 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 CD-ROM, 2005.Indicators CD-ROM, 2005.

47

Growth in Real GDP Per Capita Growth in Real GDP Per Capita and Economic Freedom Quartileand Economic Freedom Quartile

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

GD

P P

er

Ca

pit

a %

Gro

wth

,

19

94

-20

03

Least 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 CD-ROM, 2005.CD-ROM, 2005.

48

Economic Freedom and Economic Freedom and UnemploymentUnemployment

0.0

3.0

6.0

9.0

12.0

15.0

To

tal U

ne

mp

loy

me

nt

(% o

f to

tal l

ab

or

forc

e),

20

00

-20

02

Least FreeQuartile


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

Sources: The Fraser Institute; The World Bank, World Development Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.Indicators CD-ROM, 2005.

49

New research:New research: Economic Freedom and Foreign AidEconomic Freedom and Foreign Aid

50

Economic Freedom and Foreign Aid:Economic Freedom and Foreign Aid:

Millennium Development Goals Halving poverty by 2015

Lack of empirical evidence on the effectiveness of aid

51

Economic Freedom and Economic Freedom and Foreign Aid:Foreign Aid:

Background: As of 2000, approximately 75% of world’s poor live in

Africa

In 1970, less than 15 percent of world’s poor lived in the region

From 1970 to 2000, Africa received $400 billions in foreign aid

Aid has growth continuously from 5% of GNI to 18% in 1995 when it peaked.

52

Economic Freedom and Foreign Aid:Economic Freedom and Foreign Aid:New Research by professor William Easterly:

Foreign aid has no positive impact on economic growth in poor nations

This indicates that the “push” from foreign aid is ineffective in breaking the poverty trap

Easterly shows that once economic freedom is controlled for, poor nations grow faster than rich nations

53

Policy Implications:Policy Implications:

Efforts to reduce poverty may not produce the results

Policy should be to promote economic freedom

Economic freedom has been shown to promote economic prosperity (and many other good outcomes)

54

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

55

Human Poverty Index and Human Poverty Index and Economic Freedom QuartileEconomic Freedom Quartile

0

5

10

15

20

25

30

35

40

Hu

man

Po

vert

y I

nd

ex

Least FreeQuartile


Least Free …………..…. Most FreeLeast Free …………..…. Most FreeSources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2005, available at http://hdr.undp.org/statistics/data/index_indicators.cfm.

56

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%

, 1999-2

003

Least FreeQuartile

3rdQuartile

2ndQuartile

Most FreeQuartile

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

Sources: The Fraser Institute; The World Bank, World Development Indicators CD-Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.ROM, 2005.

57

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

Least Free Quartile 3rd Quartile 2nd Quartile Most Free Quartile0.0

0.5

1.0

1.5

2.0

2.5

3.0

Income held by lowest 10% Income share held by lowest 10%

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

CD-ROM, 2005.CD-ROM, 2005.

58

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

59

Economic Freedom Versus CorruptionEconomic Freedom Versus CorruptionHigher value indicates lower level of corruptionHigher value indicates lower level of corruption

0

2

4

6

8

10

Co

rru

pti

on

Ra

tin

g

(ou

t o

f 1

0)

Least 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

2005, available at http://www.transparency.org.2005, available at http://www.transparency.org.

60

Economic Freedom and Political RightsEconomic Freedom and Political Rights Lower ratings indicate higher level of political rightsLower ratings indicate higher level of political rights

0.0

1.0

2.0

3.0

4.0

5.0

Po

liti

cal

Rig

hts

(o

ut

of

10)

Least 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, 1972 through 2004, available at http://www.freedomhouse.org/.1972 through 2004, available at http://www.freedomhouse.org/.

61

Economic Freedom and Civil LibertiesEconomic Freedom and Civil Liberties Lower ratings indicate higher level of civil liberties Lower ratings indicate higher level of civil liberties

0.0

1.0

2.0

3.0

4.0

5.0

Civ

il L

iber

ties

(o

ut

of

10)

Least 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, 1972 through 2004, available at http://www.freedomhouse.org/.Ratings, 1972 through 2004, available at http://www.freedomhouse.org/.

62

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

63

Human Development Index and Human Development Index and Economic Freedom QuartilesEconomic Freedom 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

Least FreeQuartile



Sources: The Fraser Institute; United Nations Development Programmme, Human Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2005, available at http://hdr.undp.org/.Development Indicators 2005, available at http://hdr.undp.org/.

64

Life Expectancy at Birth and Life Expectancy at Birth and Economic Freedom QuartilesEconomic Freedom Quartiles

0

20

40

60

80

Yea

rs

Least FreeQuartile



Sources: The Fraser Institute; The World Bank, World Development Indicators CD-Sources: The Fraser Institute; The World Bank, World Development Indicators CD-

ROM, 2005.ROM, 2005.

65

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

003

Least 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

CD-ROM, 2005.CD-ROM, 2005.

66

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

30

Perc

en

tag

e o

f ch

ild

ren

10-1

4 w

ho

are

in

th

e

lab

ou

r fo

rce

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

CD-ROM, 2005.CD-ROM, 2005.

67

% of Population Using Improved % of Population Using Improved Water SourcesWater Sources

0

20

40

60

80

100

Per

cen

tag

e

Least 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

CD-ROM, 2005.CD-ROM, 2005.

68

Economic Freedom and HappinessEconomic Freedom and Happiness

Causes of Happiness, 68 nation study

Variables included:

IncomeEconomic GrowthInflation

Only two variables had large effects:

Economic Freedom

Life Expectancy

UnemploymentEducationPolitical freedom

69

Economic Freedom and HappinessEconomic Freedom and Happiness

70

ConclusionsConclusionsEconomic Freedom

Increases prosperity for allReduces poverty Increases other freedomsImproves quality of life

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

71

www.freetheworld.comwww.freetheworld.com

www.fraserinstitute.cawww.fraserinstitute.ca

Documents

1 Economic Freedom of the World: 2006 Annual Report Fraser Institute Policy Briefing September 7, 2006 Mark Mullins, Executive Director Amela Karabegovic,