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Economic Freedom of the World: 2009 Annual Report. Michael Walker Senior Fellow The Fraser institute Presented at Economic Freedom of the World Network Meeting Wroclaw, Poland October 1, 2009. THANK YOU FOR COMING!.

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Economic freedom of the world 2009 annual report
Economic Freedom of the World: 2009 Annual Report

Michael Walker

Senior Fellow

The Fraser institute

Presented at Economic Freedom of the World Network Meeting

Wroclaw, Poland

October 1, 2009


Thank you for coming
THANK YOU FOR 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


Economic freedom of the world project
Economic Freedom of the World Project

Objective: find a way to measure economic freedom and explore the connection between it and other variables

25 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 freedom of the world index
What is the Economic 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 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 more than 70 different countries


What is economic freedom
What 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 freedom of the world index
Components of the Economic Freedom 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 markets

Based entirely on objective, third party data and independent surveys for 141 countries



Member Institutes of Economic Freedom of the World Network

Albanian Center for Economic Research (ACER), Albania

Fundación Libertad, Argentina

Institute of Public Affairs, Australia

TIGRA®, Austria

Center for Economic and Political Research,Azerbaijan

The Nassau Institute, Bahamas

Making Our Economy Right (MOER), Bangladesh

Scientific Research Mises Center, Belarus

Centre for the New Europe, Belgium

Fundacion Libertad y Democracia (FULIDE), Bolivia

Instituto Liberal do Rio de Janeiro, Brazil

Institute for Market Economics, Bulgaria

Le Centre des Affaires Humaines (CEDAH),Burkina Faso

The Cambodia Institute of Development Study, Cambodia

Instituto Libertad y Desarrollo, Chile

Instituto Libertad y Progreso (ILP), Colombia

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

The Institute of Economics, Croatia

Liberální Institut, Czech Republic

Center for Politiske Studier (CEPOS), Denmark

Fundación Economía y Desarrollo Inc, Dominican Republic

Instituto Ecuatoriano de Economía Política,Ecuador

International University Audentes, Estonia

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

Society for Disseminating Economic Knowledge: New Economic School – Georgia, Georgia

Liberales Institut, Germany

The Institute of Economic Affairs, Ghana

Centro de Investigaciones Económicas Nacionales, Guatemala

Institut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), Haiti

Hong Kong Centre for Economic Research, Hong Kong

Szazadveg Foundation, Hungary

Centre for Social and Economic Research (RSE), Iceland

Centre for Civil Society, India

The Institute for Development of Economics and Finance, Indonesia

Open Republic Institute, Ireland

Jerusalem Institute for Market Studies, Israel

Centro Einaudi, Italy

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

Young Entrepreneurs Association, Jordan

African Research Center for Public Policy and Market Process, Kenya

Center for Free Enterprise, Korea

Economic Policy Institute-Bishkek Consensus, Kyrgyz Republic

Lithuanian Free Market Institute, Lithuania

D'Letzeburger Land, Luxembourg

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

Open Society Forum, Mongolia

The Center for Entrepreneurship and Economic Development, Montenegro

The Prosperity Foundation, Nepal

The New Zealand Business Roundtable, New Zealand

Initiative for Public Policy Analysis, Nigeria

Center for Business and Society Incorporated (Civita), Norway

International Research Foundation (IRF), Oman

Alternate Solutions Institute, Pakistan

Pal-Think for Strategic Studies, Palestine

Fundación Libertad, Panama

Centro de Investigación y Estudios Legales (CITEL), Peru

The Center for Research and Communication, Philippines

Centrum im. Adama Smitha, Poland

Causa Liberal, Portugal

Romania Think Tank, Romania

Institute of Economic Analysis, Russia

Free Market Center (FMC), Serbia

The F.A. Hayek Foundation, Slovak Republic

The Free Market Foundation of Southern Africa, South Africa

Pathfinder Foundation, Sri Lanka

Timbro, Sweden

Liberales Institut, Switzerland

Arthur Lok Jack Graduate School of Business, The University of the West Indies, Trinidad, W.I.

Association for Liberal Thinking, Turkey

The Ukrainian Center for Independent Political Research, Ukraine

The Institute of Economic Affairs (IEA), United Kingdom

CATO Institute, USA

The Centre for the Dissemination of Economic Knowledge (CEDICE), Venezuela

Research Center for Entrepreneurship Development, Vietnam

Zambia Institute for Public Policy Analysis (ZIPPA), Zambia


Sample of Press Coverage for

Fraser Institute’ Economic Freedom of the World 2008

Dawn, Pakistan

Leader Post, Canada

L'Orient le Jour, Lebanon

Malaysia Paper, Malaysia

Marker Israel, Israel

Marketwire, Canada

Monburkina.com, Burkina Faso

Munhwa Daily Korea, Korea

Naharnet Beirut, Lebanon

Nassau Guardian, Bahamas

National Post, Canada

The New York Times, USA

Noticias Lusofonas, Angola

Oman Tribune,Oman

Pari Newspaper, Bulgaria

Portfolio Hungary, Hungary

RadioPlovdiv, Bulgaria

Reuters, USA

Russian Paper, Rusia

Sofia News Agency, Bulgaria

South China morning Post, China

Star Phoenix,Canada

Taiwan Economic News, Taiwan

Telegraph-Journal, Canada

Times of India, India

Vancouver Sun, Canada

Venezuelan Paper, Venezuela

Xinhua, China

Zambia Post, Zambia

Zimbabwe Independent, Zimbabwe

African Executive,Kenya

Al Sabah, Kuwait

Aljazeera Net, International

The American Conservative, USA

American Spectator, USA

AOL Money & Finance, USA

Asia Pulse, International

Augusta Chronicle, USA

BBC, International

Black Sea Press, Georgia

Boston Herald, USA

Budapest Sun, Romania

Bulgarian News Agency, Bulgaria

Bulgarian Post, Bulgaria

Business Day, South Africa

Business Plus TV, Pakistan

Business Recorder, Pakistan

Business Zone, Bulgaria

Cato Institute, USA

Chinese Canadian Times, Canada

Chinese Paper, China

Daily Graphic, Ghana

Daily News Sunday, USA

Dar Al Hayat, Lebanon

Darik Finance, Bulgaria

Donga Korea Daily, Korea

Econ Bulgaria, Bulgaria

Economia y Negocios, International

Economic Times India, India

Edmonton Journal, Canada

El Economista, International

El Economista.es, Spain

Financial News Korea, Korea

Financial Post Canada

Financiarul, Romania

Foreign Policy, USA

Georgian Business Week, Georgia

Globe and Mail, Canada

Globe Investor, USA

Globes, Israel

Hankyoreh Daily Korea, Korea

Herald (Ottawa, KS), USA

Hong Kong Commercial Daily, Hong Kong

Hong Kong Economic Times, Hong Kong

Hungarian News Digest, Hungary

Indian Business Insight, India

Investor's Business Daily, USA

Israel Business Arena, Israel

Jang Lahore, Pakistan

Katmandu Post, Nepal

La Presse Canadienne, Canada

Latin Business Chronicle, USA

Le Droit, Canada

Leader, Iceland










Overall economic freedom index and the top 10
Overall Economic Freedom Index and the Top 10 Results

Source: The Fraser Institute.


Overall economic freedom index and the bottom ten
Overall Economic Freedom Index and the Bottom Ten Results

Source: The Fraser Institute.


Economic freedom over time
Economic Freedom Over Time Results

Source: The Fraser Institute.



Size of government and the top 10
Size of Government and the Top 10 Results

Source: The Fraser Institute.


Legal system and property rights and the top 10
Legal System and Property Rights and the Top 10 Results

Source: The Fraser Institute.


Sound money and the top 10
Sound Money and the Top 10 Results

Source: The Fraser Institute.


Freedom to trade internationally and the top 10
Freedom to Trade Internationally and the Top 10 Results

Source: The Fraser Institute.


Regulations and the top 10
Regulations and the Top 10 Results

Source: The Fraser Institute.


Credit market regulations and the top 10
Credit Market Regulations Resultsand the Top 10

Source: The Fraser Institute.


Labor market regulations and the top 10
Labor Market Regulations Resultsand the Top 10

Source: The Fraser Institute.


Business regulations and the top 10
Business Regulations Resultsand the Top 10

Source: The Fraser Institute.


Why is economic freedom important
Why is Economic Freedom Important? Results

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



Income per person of the bottom ten
Income (per person) of the Bottom Ten Results

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


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

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Per capita income and economic freedom quartile
Per Capita Income and Economic Freedom Quartile Results

Least Free ………………... Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Growth in real gdp per capita and economic freedom quartile
Growth in Real GDP Per Capita and Economic Freedom Quartile Results

Least Free ……………..…… Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Foreign direct investment and economic freedom quartile
Foreign Direct Investment and Economic Freedom Quartile Results

Least Free ……………...…... Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.



Income share of the poorest 10 and economic freedom
Income Share of the Poorest 10% and Economic Freedom Results

Least Free …………….. Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Per capita income of poorest 10 and economic freedom
Per Capita Income of Poorest 10% and Economic Freedom Results

Least Free ……………………. Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.



Economic freedom and corruption
Economic Freedom and Corruption Results

Least Free …………………. Most Free

Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, 2006/2007, available at http://www.transparency.org.


Economic freedom and political rights
Economic Freedom and Political Rights Results

Least Free …………………. Most Free

Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at http://www.freedomhouse.org/.


Economic freedom and civil liberties
Economic Freedom and Civil Liberties Results

Least Free …………………… Most Free

Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at http://www.freedomhouse.org/.


The impact of Economic Freedom on the UN’s Human Development Index and other indicators of well-being


Human development index and economic freedom quartiles
Human Development Index and Economic Freedom Quartiles Development Index and other indicators of well-being

Least Free ……………. Most Free

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


Life expectancy at birth and economic freedom quartiles
Life Expectancy at Birth and Economic Freedom Quartiles Development Index and other indicators of well-being

Least Free ……………. Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Infant mortality and economic freedom quartile
Infant Mortality and Economic Freedom Quartile Development Index and other indicators of well-being

Least Free ………..………. Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Of population using improved water sources
% of Population Using Improved Water Sources Development Index and other indicators of well-being

Least Free ………………... Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Environmental performance and economic freedom quartile
Environmental Performance and Economic Freedom Quartile Development Index and other indicators of well-being

Least Free ………..……….. Most Free

Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.


Is the efw project working
Is the EFW Project Working? Development Index and other indicators of well-being

  • Is Global Policy Performance improving?

  • Is the Economic Freedom of the World ranking of policy producing better policy choices?

  • Can the Economic Freedom of the World Data show us whether there is improvement?

  • The following slides examine global policy conduct for patterns of development


What would we expect to find if the efw process is working
What would we expect to find if the EFW process is working? Development Index and other indicators of well-being

  • A process of learning from experience

  • Starting from disagreement amongst countries about the correct course of policy we would hope to see a reduction over time in the amount of policy variation and increasing adoption of polices that enhance economic freedom

  • The following chart sequence shows what we would observe in a world which was learning from experience


What a desirable evolution of policy would look like
What a desirable evolution of policy would look like Development Index and other indicators of well-being


How has the evolution toward economic freedom actually proceeded
How has the Evolution toward Economic Freedom Actually Proceeded?

  • In the following slides we examine the extent of agreement amongst countries about freedom policy choices over a thirty year period

  • We examine each component of economic freedom separately and then the total measure







Evolution in global policy about property rights and rule of law
Evolution in Global Policy about Proceeded? Property Rights and Rule of Law





The triumph of milton friedman over world inflation rates
The Triumph of Milton Friedman Proceeded?Over World Inflation Rates




Evolution of global policy about tariff and trade regulations
Evolution of Global Policy about Proceeded? Tariff and Trade Regulations








Conclusions
Conclusions capital

Economic Freedom

Increases prosperity for all

Reduces poverty

Increases other freedoms

Improves quality of life

There is increasing global agreement about the need for more economic freedom

Recent deviations from some aspects of economic freedom will be unlikely to persist in the face of the general move toward more freedom


Www freetheworld com www fraserinstitute org
www.freetheworld.com capitalwww.fraserinstitute.org


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