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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.

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Presentation on theme: "Economic Freedom of the World: 2009 Annual Report Michael Walker Senior Fellow The Fraser institute Presented at Economic Freedom of the World Network."— Presentation transcript:

1 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

2 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

3 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 worlds top scholars

4 What is the Economic Freedom of the World Index? u An annual compilation of data representing factors which make a country economically free u Authors: James Gwartney and Robert Lawson u A compendium of 42 government policies affecting economic freedom based on objective data or independent surveys u A ranking of 141 countries representing 95% of the worlds population according to the extent to which they permit their citizens to be economically free u Now a collaboration of Institutes in more than 70 different countries

5 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

6 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

7 Talk about making a difference …

8 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 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 Member Institutes of Economic Freedom of the World Network 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

9 Sample of Press Coverage for Fraser Institute Economic Freedom of the World 2008 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 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 Economia y Negocios, International Economic Times India, India Edmonton Journal, Canada El Economista, International El Economista.es, Spain Financial News Korea, Korea Financial PostCanada 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

10 Sub-national and Regional Indices

11 Economic Freedom of the Arab World

12 Marketization Index of Chinese Provinces

13 Economic Freedom Index of Indian States

14 Economic Freedom Index of German States

15 Economic Freedom Index of Argentinean Provinces

16 Economic Freedom of North America

17 Introducing the 2009 Economic Freedom of the World Index Results

18

19 Overall Economic Freedom Index and the Top 10 Source: The Fraser Institute.

20 Overall Economic Freedom Index and the Bottom Ten Source: The Fraser Institute.

21 Economic Freedom Over Time Source: The Fraser Institute.

22 Economic Freedom and the Top 10

23 Size of Government and the Top 10 Source: The Fraser Institute.

24 Legal System and Property Rights and the Top 10 Source: The Fraser Institute.

25 Sound Money and the Top 10 Source: The Fraser Institute.

26 Freedom to Trade Internationally and the Top 10 Source: The Fraser Institute.

27 Regulations and the Top 10 Source: The Fraser Institute.

28 Credit Market Regulations and the Top 10 Source: The Fraser Institute.

29 Labor Market Regulations and the Top 10 Source: The Fraser Institute.

30 Business Regulations and the Top 10 Source: The Fraser Institute.

31 Why is Economic Freedom 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

32 The impact on economic growth and development

33 Income (per person) of the Bottom Ten Income (per person) of the Bottom Ten Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

34 Income (per person) of the Top 10 Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

35 Per Capita Income and Economic Freedom Quartile Least Free ………………... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

36 Growth in Real GDP Per Capita and Economic Freedom Quartile Least Free ……………..…… Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

37 Foreign Direct Investment and Economic Freedom Quartile Least Free ……………...…... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

38 Economic Freedom,the Poor, and Inequality

39 Income Share of the Poorest 10% and Economic Freedom Least Free …………….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

40 Per Capita Income of Poorest 10% and Economic Freedom Least Free ……………………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

41 Economic Freedom, Other Freedoms and Democracy

42 Economic Freedom and Corruption Least Free …………………. Most Free Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index, 2006/2007, available at

43 Economic Freedom and Political Rights Least Free …………………. Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at

44 Economic Freedom and Civil Liberties Least Free …………………… Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 2007, available at

45 The impact of Economic Freedom on the UNs Human Development Index and other indicators of well-being

46 Human Development Index and Economic Freedom Quartiles Least Free ……………. Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2009, available at

47 Life Expectancy at Birth and Economic Freedom Quartiles Least Free ……………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

48 Infant Mortality and Economic Freedom Quartile Least Free ………..………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

49 % of Population Using Improved Water Sources Least Free ………………... Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

50 Environmental Performance and Economic Freedom Quartile Least Free ………..……….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators, 2009.

51 Is the EFW Project Working? 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

52 What would we expect to find if the EFW process is working? 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

53 What a desirable evolution of policy would look like

54 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

55 Global Agreement about The Size of Government

56

57 Evolution in Global Policy about the Size of Government

58 Global Agreement about property rights and the rule of law

59

60 Evolution in Global Policy about Property Rights and Rule of Law

61 Global Agreement about the need for sound money

62

63 Evolution in Global Policy about the need for sound money

64 The Triumph of Milton Friedman Over World Inflation Rates

65 Global Agreement about Tariffs and Trade regulation

66

67 Evolution of Global Policy about Tariff and Trade Regulations

68 Global Agreement about regulation of business, labour and capital

69

70 Evolution of Global Policy about Regulation

71 Global Agreement about Economic Freedom

72

73 Evolution of Global Pursuit of Economic Freedom

74 Conclusions 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

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