Economic freedom overview benefits, arab world data, and index comparisons

The Economic Freedom of The Economic Freedom of the World: 2010 Reportthe World: 2010 Report

Economic Freedom Overview: Benefits, Arab and World data,

and Index Comparisons.

Fred McMahonVice-president International Research

The Fraser Institute

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

• 30 year project • Led by the late Milton Friedman and Rose

Friedman, and Michael Walker• Involved 60 of the world’s top scholars

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, Robert Lawson, and Joshua Hall

• A compendium of 42 government policies affecting economic freedom based on objective data or independent surveys

• 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

• Now a collaboration of Institutes in 80 nations and territories

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

Components of the Economic Components of the Economic

Freedom of the World IndexFreedom of the World Index

• Size of government and taxation• Private property and the rule of law• Soundness of money• Trade regulation and tariffs• Regulation of business, labour and

capital marketsBased entirely on objective, third party data

and independent surveys for 141 countries

The Fraser Index Compared to the Competition

USAID MISSION/CAIRO:ECONOMIC FREEDOM INDICES

• The Fraser non-quantitative variables are in fact transparent and because of this, they are replicable. In each case, the Fraser analysts explain how they obtained and scored these variables—and, of course, …

• The Heritage report's quantitative variables are much less transparent and, as a result are not reliably replicable by outsiders several of the Heritage non-quantifiable variables are overlapping (even redundant) in nature.

USAID MISSION/CAIRO:Continued

The argument for preferring the Fraser … index to the Heritage method is as follows:

• First, the Fraser Index is decidedly less ideological in composition and more strongly based in economic theory …

• Second, its methodology has consistently been far more transparent;

• Third, the Fraser analysts see their index as an evolving tool, introducing methodological modifications in each succeeding report as continuing research may indicate—and doing so in transparent fashion;

• Fourth, the lengthy time series of Fraser Index values for Egypt give us a 'track record' that can be compared to actual historical conditions;

• Finally, the Fraser analysts confine their efforts to a smaller sample of countries, which may be possibly indicative of greater care and selectivity in the use of available data.

The World and Arab Indexes

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

Albanian Center for Economic Albanian Center for Economic Research (ACER), AlbaniaResearch (ACER), 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, BulgariaBulgariaLe Centre des Affaires Humaines Le Centre des Affaires Humaines (CEDAH),Burkina Faso(CEDAH),Burkina FasoThe Cambodia Institute of The Cambodia Institute of Development Study, Cambodia Development Study, Cambodia Instituto Libertad y Desarrollo, ChileInstituto Libertad y Desarrollo, ChileInstituto Libertad y Progreso (ILP), Instituto Libertad y Progreso (ILP), 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,EcuadorInternational University Audentes, International University Audentes, EstoniaEstoniaAssociation pour la Liberté Association pour la Liberté Economique et le Progrès Social Economique et le Progrès Social (ALEPS), France(ALEPS), FranceSociety for Disseminating Economic Society for Disseminating Economic Knowledge:, New Economic School – Knowledge:, New Economic School – Georgia, GeorgiaGeorgia, Georgia

Center for Business and Society Incorporated (Civita), Center for Business and Society Incorporated (Civita), Norway Norway International Research Foundation (IRF), OmanInternational Research Foundation (IRF), OmanAlternate Solutions Institute, PakistanAlternate Solutions Institute, PakistanPal-Think for Strategic Studies, PalestinePal-Think for Strategic Studies, PalestineFundación Libertad, PanamaFundación Libertad, PanamaCentro de Investigación y Estudios Legales (CITEL), Centro de Investigación y Estudios Legales (CITEL), PeruPeruThe Center for Research and Communication, The Center for Research and Communication, PhilippinesPhilippinesCentrum 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, RussiaFree Market Center (FMC), SerbiaFree Market Center (FMC), SerbiaThe F.A. Hayek Foundation, Slovak RepublicThe F.A. Hayek Foundation, Slovak RepublicThe Free Market Foundation of Southern Africa, South The Free Market Foundation of Southern Africa, South AfricaAfricaPathfinder Foundation, Sri LankaPathfinder Foundation, Sri LankaTimbro, SwedenTimbro, SwedenLiberales Institut, SwitzerlandLiberales Institut, SwitzerlandArthur Lok Jack Graduate School of Business, The Arthur Lok Jack Graduate School of Business, The University of the West Indies, Trinidad, W.I.University of the West Indies, Trinidad, W.I.Association for Liberal Thinking, TurkeyAssociation for Liberal Thinking, TurkeyThe Ukrainian Center for Independent Political The Ukrainian Center for Independent Political Research, UkraineResearch, UkraineThe Institute of Economic Affairs (IEA), United The Institute of Economic Affairs (IEA), United KingdomKingdomCATO Institute, USACATO Institute, USAThe Centre for the Dissemination of Economic The Centre for the Dissemination of Economic Knowledge (CEDICE), VenezuelaKnowledge (CEDICE), VenezuelaResearch Center for Entrepreneurship Development, Research Center for Entrepreneurship Development, VietnamVietnamZambia Institute for Public Policy Analysis (ZIPPA), Zambia Institute for Public Policy Analysis (ZIPPA), ZambiaZambia

Member Institutes of Economic Freedom of the World Network

Liberales Institut, GermanyLiberales Institut, GermanyThe Institute of Economic Affairs, GhanaThe Institute of Economic Affairs, GhanaCentro de Investigaciones Económicas Centro de Investigaciones Económicas Nacionales, GuatemalaNacionales, GuatemalaInstitut de Recherche pour la Liberte Institut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), HaitiEconomique et la Prosperite (IRLEP), HaitiHong Kong Centre for Economic Research, Hong Kong Centre for Economic Research, Hong KongHong KongSzazadveg Foundation, HungarySzazadveg Foundation, HungaryCentre for Social and Economic Research Centre for Social and Economic Research (RSE), Iceland(RSE), IcelandCentre for Civil Society, IndiaCentre for Civil Society, IndiaThe Institute for Development of The Institute for Development of Economics and Finance, IndonesiaEconomics and Finance, IndonesiaOpen Republic Institute, IrelandOpen Republic Institute, IrelandJerusalem Institute for Market Studies, Jerusalem Institute for Market Studies, IsraelIsraelCentro Einaudi, ItalyCentro Einaudi, ItalyBureau d'Analyse d'Ingenierie et de Bureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory CoastLogiciels (BAILO), Ivory CoastYoung Entrepreneurs Association, JordanYoung Entrepreneurs Association, JordanAfrican Research Center for Public Policy African Research Center for Public Policy and Market Process, Kenyaand Market Process, KenyaCenter for Free Enterprise, KoreaCenter for Free Enterprise, KoreaEconomic Policy Institute-Bishkek Economic Policy Institute-Bishkek Consensus, Kyrgyz RepublicConsensus, Kyrgyz RepublicLithuanian Free Market Institute, Lithuanian Free Market Institute, LithuaniaLithuaniaD'Letzeburger Land, LuxembourgD'Letzeburger Land, LuxembourgCentro de Investigación para el Desarrollo Centro de Investigación para el Desarrollo A.C., A.C., MexicoMexicoOpen Society Forum, MongoliaOpen Society Forum, MongoliaThe Center for Entrepreneurship and The Center for Entrepreneurship and Economic Development, MontenegroEconomic Development, MontenegroThe Prosperity Foundation, NepalThe Prosperity Foundation, NepalThe New Zealand Business Roundtable, The New Zealand Business Roundtable, New ZealandNew ZealandInitiative for Public Policy Analysis, Initiative for Public Policy Analysis, NigeriaNigeria

1) Sample of Press Coverage forFraser Institute’ Economic Freedom of the World 2009

A Traves De VenezuelaA Traves De VenezuelaAbout.com:MarketsAbout.com:MarketsafricaFMafricaFMAfrican ExecutiveAfrican ExecutiveAlerta VenezuelaAlerta VenezuelaAlibaba.com NewsAlibaba.com NewsAlphaTrade FinanceAlphaTrade FinanceAlWatan DailyAlWatan DailyAOL Money & FinanceAOL Money & FinanceBahamas WeeklyBahamas WeeklyBalkaninsight.comBalkaninsight.comBaltic Business DailyBaltic Business DailyBetter Trends Financial Better Trends Financial LiveLiveBrisbane TimesBrisbane TimesBusiness DayBusiness DayBusiness MirrorBusiness MirrorBusiness TimesBusiness TimesBusiness World OnlineBusiness World OnlineBusinessWorldBusinessWorldCabalamuseCabalamuseCatamacra es noticiaCatamacra es noticiaCBC-rCBC-rcdnews.com.twcdnews.com.twChina BusinessChina Business

GuardianGuardianGuía VenezuelaGuía VenezuelaGulf Daily NewsGulf Daily NewsHaaretzHaaretzHerald MediaHerald MediaHong Kong Economic JournalHong Kong Economic JournalHong Kong TraderHong Kong TraderHospodářské NovinyHospodářské NovinyIllinois Daily HeraldIllinois Daily HeraldIndividual.comIndividual.comInstitutional InvestorInstitutional InvestorInstituto Ecuatoriano de Economia Instituto Ecuatoriano de Economia PoliticaPoliticaInvertiaInvertiaInvertia PeruInvertia PeruInvertia VenezuelaInvertia VenezuelainvestujemeinvestujemeIStock AnalystIStock AnalystIWF InkwellIWF InkwellJakarta PostJakarta PostJerusalem PostJerusalem PostKhaleej Times OnlineKhaleej Times OnlineKnowledge ProblemKnowledge ProblemKorea TimesKorea TimesLa Manana CórdobaLa Manana Córdoba

China Weekly NewsChina Weekly NewsCitizen EconomistsCitizen EconomistsCNBCCNBCCNBC European BusinessCNBC European BusinessColumbia StarColumbia StarCPI FinancialCPI FinancialDiario el FinancieroDiario el FinancieroEconomia y Negocios OnlineEconomia y Negocios OnlineEconomics RoundtableEconomics RoundtableEconomistEconomistEl Espectador UruguayEl Espectador UruguayEl NacionalEl NacionalEl Paso TimesEl Paso TimesElsigloweb.comElsigloweb.comeMediaWorld.comeMediaWorld.comEntorno InteligenteEntorno InteligenteEntorno Inteligente.comEntorno Inteligente.comEpochtimes.com (Australia)Epochtimes.com (Australia)Fairchild RadioFairchild RadioFinanz und WirtschaftFinanz und WirtschaftForeign PolicyForeign PolicyFrenos & ContrapesosFrenos & ContrapesosGazeta.pl GospaoarkaGazeta.pl GospaoarkaGCPNews.comGCPNews.comgigapedia.comgigapedia.comGlobal TimesGlobal Times

\\

2) Sample of Press Coverage forFraser Institute’ Economic Freedom of the World 2009

L'agefiL'agefilatercera.comlatercera.comLepetitjournal.comLepetitjournal.comLibertad y DesarrolloLibertad y DesarrolloL'Orient le JourL'Orient le JourMacau BusinessMacau BusinessMail & GuardianMail & GuardianMarket WireMarket WireMediafax News Brief Mediafax News Brief Service BucharestService BucharestMiddle East Company NewsMiddle East Company NewsMinuto59Minuto59MNNews & Mina MNNews & Mina Montenegrin NewsMontenegrin NewsMoney WebMoney WebMoneyworks.aeMoneyworks.aeMSN MoneyMSN MoneyMumbai MirrorMumbai MirrorNárodná ObrodaNárodná ObrodaNational Business ReviewNational Business ReviewNepal NewsNepal NewsNewsRoomAmerica.comNewsRoomAmerica.comNewstin.aeNewstin.aeNoticia Al DiaNoticia Al DiaNoviniteNoviniteObserver (Oman)Observer (Oman)Oman DailyOman Daily

Sydney Morning HeraldSydney Morning HeraldSYS-CON IndiaSYS-CON IndiaTaiwan NewsTaiwan NewsTalCualDigital.comTalCualDigital.comThe Standard (HK)The Standard (HK)Times of OmanTimes of OmanTlačová Agentúra Slovenskej RepublikyTlačová Agentúra Slovenskej RepublikyTrade ArabiaTrade ArabiaTribuneTribuneTripoli PostTripoli PostTu Noticiero Digital.comTu Noticiero Digital.comVeraSage InstituteVeraSage InstituteVoice OnlineVoice OnlineVoxEU.orgVoxEU.orgWA TodayWA TodayWABC-TV Channel 7WABC-TV Channel 7Whited SepulcheWhited SepulcheWorcester Telegram & GazetteWorcester Telegram & GazetteWorld JournalWorld Journalwww.calcalist.co.ilwww.calcalist.co.ilwww.ynet.co.ilwww.ynet.co.ilXinhua OnlineXinhua OnlineXorteXorteYeniCagYeniCagZawyaZawyaZhongGuo.caZhongGuo.ca

Oman TribuneOman TribuneOne's ObservationsOne's ObservationsOpen DemocracyOpen DemocracyoPeniazochoPeniazochOrbitandoOrbitandoPlus News PakistanPlus News PakistanPolitical CalculationsPolitical CalculationsPortalnet.caPortalnet.caPublic ChoicePublic Choiceqtnews.netqtnews.netReason: Hit & RunReason: Hit & RunReport on Business MagazineReport on Business MagazineRilindja DemokratrikaRilindja DemokratrikaRosarioNetRosarioNetSake 24Sake 24SEEbiz.eu (BIH)SEEbiz.eu (BIH)Sing Tao (Hong Kong)Sing Tao (Hong Kong)sinomontreal.casinomontreal.caSITA Slovenska Tlacova SITA Slovenska Tlacova Agentura Agentura SITA Slovenska Tlacova SITA Slovenska Tlacova Agentura (English)Agentura (English)Sofia EchoSofia EchoSouth Asian JournalSouth Asian JournalSouth China Morning PostSouth China Morning PostSpero NewsSpero NewsSports NetworkSports NetworkStreetInsider.comStreetInsider.com

Sub-national and Regional IndicesSub-national and Regional Indices

Economic Freedom of the Arab WorldEconomic Freedom of the Arab World

Economic Freedom of Latin AmericaEconomic Freedom of Latin America

Economic Freedom of FrancophonieEconomic Freedom of Francophonie

Marketization Index of Chinese Provinces

Economic Freedom Index of Indian States

Economic Freedom Index of Argentinean Provinces

Economic Freedom of North AmericaEconomic Freedom of North America

Introducing the 2010 Economic Introducing the 2010 Economic Freedom of the World Index ResultsFreedom of the World Index Results

Economic Freedom Over TimeEconomic Freedom Over Time

6.10 5.50

5.53

5.56

5.87

6.25

6.58

6.69

6.73

6.74

6.67

6.60

6.60

6.60

0

2

4

6

8

10

Eco

no

mic

Fre

edo

m S

core

1970 1975 1980 1985 1990 1995 2000 2005 2006 2007 2008 2005 2006 2007

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

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

The impact on prosperityThe impact on prosperity and development and development

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

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

GD

P P

er C

apit

a (p

pp

), 2

007

Least FreeQuartile

3rd Quartile2nd QuartileMost FreeQuartile

Sources: The Fraser Institute; The World Bank, World Development Sources: The Fraser Institute; The World Bank, World Development Indicators, Indicators, 2010.2010.

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

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

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

GD

P P

er

Ca

pit

a %

Gro

wth

,

19

90

-20

07

Least FreeQuartile


Sources: The Fraser Institute; The World Bank, World Development Indicators, Sources: The Fraser Institute; The World Bank, World Development Indicators, 2010.2010.


Growth in Developing Nations Per Growth in Developing Nations Per Capita and Economic Freedom QuartileCapita and Economic Freedom Quartile

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

GD

P P

er

Ca

pit

a %

Gro

wth

,

19

90

-20

07

Least FreeQuartile




Foreign Direct Investment and Foreign Direct Investment and Economic Freedom QuartileEconomic Freedom Quartile

0.0%

3.2%

6.4%

9.7%

12.9%

16.1%

Fo

reig

n d

ire

ct

inv

es

tme

nt,

ne

t in

flo

ws

(%

of

GD

P),

19

90

-20

07

Least FreeQuartile




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

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

wes

t 10%

, 199

0-2

007

Least FreeQuartile

3rdQuartile

2ndQuartile

Most FreeQuartile



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

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Least Free Quartile3rd Quartile2nd QuartileMost Free Quartile$0

$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,000

Income share held by lowest 10%, 1990-2008Average income earned by lowest 10%, 2008

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

2010.2010.


Economic Freedom, Governance, Economic Freedom, Governance, and Democracyand Democracy

Economic Freedom and Civil/Political RightsEconomic Freedom and Civil/Political Rights

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Po

litic

al R

igh

ts (

ou

t o

f 7)

Least FreeQuartile


Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2008, available at http://www.freedomhouse.org/.2008, available at http://www.freedomhouse.org/.


Economic Freedom and CorruptionEconomic Freedom and CorruptionHigh scores indicate low corruptionHigh scores indicate low corruption

0

2

4

6

8

10

Co

rru

pti

on

Ra

tin

g

(ou

t o

f 1

0)

Least FreeQuartile


Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, 2008/2009, available at http://www.transparency.org.2008/2009, available at http://www.transparency.org.


The impact of Economic Freedom on The impact of Economic Freedom on other indicators of well-beingother indicators of well-being

Economic Freedom and Economic Freedom and Life SatisfactionLife Satisfaction

0.01.02.03.04.05.06.07.08.0

Civ

il L

iber

ties

(o

ut

of

10)

Least FreeQuartile


Sources: The Fraser Institute; Freedom House, he (un)Happy Planet Index 2.0. Why Sources: The Fraser Institute; Freedom House, he (un)Happy Planet Index 2.0. Why good lives don't have to cost the Earth. 2009.good lives don't have to cost the Earth. 2009.


LiteracyLiteracyMale FemaleMale Female

0.5

0.6

0.7

0.8

0.9

1.0

Least FreeQuartile

3rd Quartile2nd QuartileMost Free Quartile


Sources: The Fraser Institute; United Nations Development Programmme, Human Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2009, available at http://hdr.undp.org/.Development Indicators 2009, available at http://hdr.undp.org/.

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

2009.2009.


ConclusionsConclusions

Economic Freedom

• Increases prosperity for all

• Reduces poverty

• Increases other freedoms

• Improves quality of life

www.freetheworld.comwww.freetheworld.com

www.fraserinstitute.orgwww.fraserinstitute.org

Economy & Finance

Economic freedom overview benefits, arab world data, and index comparisons