The impact of economic freedom

The Fraser Institute's "Economic Freedom of the World," has played an important role in advancing the understanding of freedom and efficiency, and has become a key research tool to investigate the impact of economic freedom in countries, says Fred McMahon, Director of the Center for Globalisation Studies at the Fraser Institute.

For instance, findings include:

  • Countries with more economic freedom have substantially higher per capita incomes – $2,998 in the least free quartile to $24,402 in the most free.

  • Growth rates are higher in more economically free countries, from an average of -0.2 per cent in the least free to 2.1 per cent in the most free.

  • Life expectancy is over 20 years longer in countries with the most economic freedom than it is in those with the least.

  • Political rights and civil liberties increase substantially in countries as economic freedom increases.

    Overall, the research suggests that economic freedom liberates people from dependence on – and abuses by – government, and thus opens the door for increases in other freedoms, not just material ones.

    As for individual countries, on a scale of one to 10, with 10 being highest, key findings include:

  • The average economic freedom score has risen from 5.1 in 1980 to 6.5 in 2004.

  • Hong Kong had the highest rating for economic freedom at 8.7, closely followed by Singapore at 8.5.

  • The United States, New Zealand and Switzerland tied for third with ratings of 8.2.

  • At the bottom of the list, China and Russia ranked 95th and 102nd, respectively, in terms of their economic freedom.

    Source: Fred McMahon, Ten Years of Economic Freedom, Fraser Forum, September 2006.

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    FMF Policy Bulletin/ 10 October 2006
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