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Economic Freedom of the World: 2007 Annual ReportOman’s Achievement • International Research Foundation Press Conference • Muscat, Oman September 4, 2007 • Fred McMahon, Director, Globalization Studies, The Fraser Institute Canada
THANK YOU FOR COMING! • The key to changing the world is changing the climate of opinion about what works and what does not work in creating prosperity and other positive outcomes • 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
It is a pleasure and an honour to be here I would like to thank Salem Al Ismaily, Executive President of the Omani Center for Investment Promotion and Export Development, and Azzan Al Busaidi, CEO of the International Research Foundation of Oman, for inviting me and congratulate both on the great work they are doing for Oman and worldwide in providing the best possible information here and internationally.
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
Why is economic freedom important • People are the best positioned to make choices for themselves and their family. • With voluntary economic agreements, everyone gains. • This dynamic spreads through the economy and generates prosperity and hope • A quick peak at the top and bottom 10.
Income (per person) of the Top 10 Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2007.
Income (per person) of the Bottom Ten Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2007.
Economic Freedom of the World Project • Objective: find a way to measure economic freedom and explore the connection between it and other variables • 20 year project • Led by the late Milton Friedman, Rose Friedman and Michael Walker • Involved 60 of the world’s top scholars
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 variables 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 71 different countries
How is Economic Freedom MeasuredAnd what the measurements mean • 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
Member Institutes of Economic Freedom of the World Network Albanian Center for Economic Research, 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 Cambodia Institute of Development Study, Cambodia The Fraser Institute, Canada Instituto Libertad y Desarrollo, Chile ILP- Instituto Libertad y Progreso, 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 Concordia Audentes, Audentes University, 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, Iceland Centre for Civil Society, India The Institute for Development of Economics and Finance, Indonesia Open Republic Institute, Ireland Institute for Advanced Strategic and Political Studies, Israel Centro Einaudi, Italy Bureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory Coast 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 New Zealand Business Roundtable, New Zealand Institute of Public Policy Analysis, Nigeria Civita – Center for Business and Society Incorporated, Norway Alternate Solutions Institute, Pakistan 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 The F.A. Hayek Foundation, Slovak Republic The Free Market Foundation of Southern Africa, South Africa Pathfinder Foundation , Sri Lanka International Research Foundation (IRF), Sultanate of Oman 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, United Kingdom CATO Institute, USA The Centre for the Dissemination of Economic Knowledge (CEDICE), Venezuela Research Center for Entrepreneurship and Development Policies, Vietnam Free Market Center (FMC), Yugoslavia Zambia Institute for Public Policy Analysis (ZIPPA), Zambia
Sample of Press Coverage for Fraser Institute’ Economic Freedom of the World 2006 All Africa, Africa Ambito Financiero, Argentina El Litoral, Argentina Daily News, Bahrain Daily Star, Beirut Mmegi, Botswana Ekonomika, Bratislava Capital Weekly, Bulgaria Investor, Bulgaria Novinar, Bulgaria Sega, Bulgaria Sofia Echo, Bulgaria Calgary Herald, Canada Vancouver Sun, Canada Globe and Mail, Canada National Post, Canada South China Morning Post, China Xinhua News Agency, China Business Day, Colombia La Colombiano, Colombia La Republica, Colombia Portafolio, Colombia La Prensa Libre, Costa Rica Baltic Business Weekly, Estonia Postman, Estonia L'Agefi Suisse, France Press Digest, Hong Kong Reuters, Hong Kong Standard, Hong Kong Budapest Business Journal, Hungary MTI Eco News, Hungary Business Weekly, Iceland Frettabladid, Iceland Business Standard, India Times of India, India Economist, International Zeev Klein, Israel Corrier Economica, Italy Il Corriere della Sera, Italy Il Tempo, Italy Indiscreto, Italy Jakarta Post, Jakarta Korea Economic Daily, Korea Korea Herald, Korea Korea Times, Korea Seoul Daily, Korea Yon Hap News, Korea Latvian News Agency, Latvia Bernama Daily, Malaysia Business Times, Malaysia Daily Express, Malaysia El Economista, Mexico El Financiero, Mexico El Universal, Mexico Tiempo, Mexico Daily News, Montenegro Daily Press, Montenegro Mina business, Montenegro Pobjeda, Montenegro Faz.Net, Netherlands International Herald Tribune, New Zealand Business Recorder, Pakistan Poland Today, Poland Rompres, Romania BBC Monitoring, Russia Kommersant, Russia Biz Day, South Africa Business Day, South Africa Mail and Guardian, South Africa News 24, South Africa Sunday times, South Africa Libertad Digital, Spain Taipei Times, Taiwan Bangkok Post, Thailand Turkish Daily News, Turkey Business Journal, US TCS Daily, US Washington Times, US El Universal, Venezuela
Introducing the 2007 Economic Freedom of the World Index Results Oman’s Achievement
Oman and the World • Oman is one of the world’s top 20 economically free nations • Oman and the UAE are essentially tied as the freest nations in the Arab world • Oman is well ahead of the world average
Economic Freedom: The World Oman Source: The Fraser Institute.
Economic Freedom Over Time Source: The Fraser Institute.
Economic Freedom: The Top 20!! Source: The Fraser Institute.
Size of Government: Top 20 Source: The Fraser Institute.
Sound Money: Top 20 Source: The Fraser Institute.
Freedom to Trade: Top 20 Source: The Fraser Institute.
Credit Market Regulation: Top 20 Source: The Fraser Institute.
Labour Market Regulation: Top 20 Source: The Fraser Institute.
Business Regulation: Top 20 Source: The Fraser Institute.
Oman’s Achievement:Focus on the legal system • Single most important factor for economic freedom • Property rights and contracting particularly important for economic growth • Institutional improvement is the greatest challenge faced by all nations • Oman has great achievements • Leads the Arab world and the vast majority of other nations including France and Belgium
Legal System: Top 20 Source: The Fraser Institute.
Per Capita Income and Economic Freedom Quartile Least Free …………… Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2007.
Per Capita Income of Poorest 10% and Economic Freedom Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2007.
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 Least Free ……………. Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2006, available at http://hdr.undp.org/.
Life Expectancy at Birth and Economic Freedom Quartiles Least Free ……………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD- ROM, 2007.
Infant Mortality and Economic Freedom Quartile Least Free ………..…. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2007.
% of Population Using Improved Water Sources Least Free …………….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2007.
Economic Freedom lays the foundation for the natural evolution of other freedoms and democracy over time
Economic Freedom and Political RightsLower ratings indicate higher level of political rights Least Free ……………. Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 1972 through 2005, available at http://www.freedomhouse.org/.
Economic Freedom and Civil Liberties Lower ratings indicate higher level of civil liberties Least Free …….. Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 1972 through 2005, available at http://www.freedomhouse.org/.
Economic Freedom Versus CorruptionHigher value indicates lower level of corruption Least Free ………….. Most Free Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, available at http://www.transparency.org.
Increasing economic freedom • Reduce Size of Government • High government consumption (35.5% of total consumption) can crowd out private sector initiatives and reduce economic freedom
Increasing economic freedom • Legal structure: Oman’s achievements are great but improvements are possible • Legal enforcement of contracts (6.4 out of 10) should be more certain and timely
Oman has a bright future • Oman already has high achievement in economic freedom • Oman has steadily increased its economic freedom • Far-sighted leaders like Salem and Azzan and many others are committed to increasing the economic freedom and well-being of Omanis.