Presentation on theme: "Economic Freedom of the World: 2006 Annual Report"— Presentation transcript:
1Economic Freedom of the World: 2006 Annual Report Fraser InstitutePolicy BriefingSeptember 7, 2006Mark Mullins, Executive DirectorAmela Karabegovic, Senior Research Economist
2THANK 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 developmentThe key to changing the climate of opinion is providing the widest possible audience with good information about the causes of development and under-development
3Economic Freedom of the World Project Objective: find a way to measure economic freedom and explore the connection between it and other variables20 year projectLed by Professor Milton Friedman, Rose Friedman and Michael WalkerInvolved 60 of the world’s top scholars
4What is The Economic Freedom of the World Index? An annual compilation of data representing factors which make a country economically freeAuthors: James Gwartney and Robert LawsonA compendium of 38 government policies affecting economic freedom based on objective data or independent surveysA ranking of 130 countries representing 93% of the world’s population according to the extent to which they permit their citizens to be economically freeNow a collaboration of Institutes in 71 different countries
5What 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
6Components of The Economic Freedom of the World Index Size of government and taxationPrivate property and the rule of lawSoundness of MoneyTrade regulation and tariffsRegulation of business, labour and capital marketsBased entirely on objective or third party data for 130 countries
8Member Institutes of Economic Freedom of the World Network Albanian Center for Economic Research, AlbaniaFundación Libertad, ArgentinaInstitute of Public Affairs, AustraliaTIGRA®, AustriaCenter for Economic and Political Research, AzerbaijanThe Nassau Institute, BahamasMaking Our Economy Right (MOER), BangladeshScientific Research Mises Center, BelarusCentre for the New Europe, BelgiumFundacion Libertad y Democracia (FULIDE), BoliviaInstituto Liberal do Rio de Janeiro, BrazilInstitute for Market Economics, BulgariaCambodia Institute of Development Study, CambodiaThe Fraser Institute, CanadaInstituto Libertad y Desarrollo, ChileILP- Instituto Libertad y Progreso, ColombiaInstituto para la Libertad y el Análisis de Políticas, Costa RicaThe Institute of Economics, CroatiaLiberální Institut, Czech RepublicCenter for Politiske Studier (CEPOS), DenmarkFundación Economía y Desarrollo Inc., Dominican RepublicInstituto Ecuatoriano de Economía Política, EcuadorInternational University Concordia Audentes, Audentes University, EstoniaAssociation pour la Liberté Economique et le Progrès Social (ALEPS), FranceSociety for Disseminating Economic Knowledge:“New Economic School – Georgia”, GeorgiaLiberales Institut, GermanyThe Institute of Economic Affairs, GhanaCentro de Investigaciones Económicas Nacionales, GuatemalaInstitut de Recherche pour la Liberte Economique et la Prosperite (IRLEP), HaitiHong Kong Centre for Economic Research, Hong KongSzazadveg Foundation, HungaryCentre for Social and Economic Research, IcelandCentre for Civil Society, IndiaThe Institute for Development of Economics and Finance, IndonesiaOpen Republic Institute, IrelandInstitute for Advanced Strategic and Political Studies, IsraelCentro Einaudi, ItalyBureau d'Analyse d'Ingenierie et de Logiciels (BAILO), Ivory CoastAfrican Research Center for Public Policy and Market Process, KenyaCenter for Free Enterprise, KoreaEconomic Policy Institute-Bishkek Consensus, Kyrgyz RepublicLithuanian Free Market Institute, LithuaniaD'Letzeburger Land, LuxembourgCentro de Investigación para el Desarrollo A.C., MexicoOpen Society Forum, MongoliaThe Center for Entrepreneurship and Economic Development, MontenegroThe New Zealand Business Roundtable, New ZealandInstitute of Public Policy Analysis, NigeriaCivita – Center for Business and Society Incorporated, NorwayAlternate Solutions Institute, PakistanFundación Libertad, PanamaCentro de Investigación y Estudios Legales (CITEL), PeruThe Center for Research and Communication, PhilippinesCentrum im. Adama Smitha, PolandCausa Liberal, PortugalRomania Think Tank, RomaniaInstitute of Economic Analysis, RussiaThe F.A. Hayek Foundation, Slovak RepublicThe Free Market Foundation of Southern Africa, South AfricaPathfinder Foundation , Sri LankaInternational Research Foundation (IRF), Sultanate of OmanTimbro, SwedenLiberales Institut, SwitzerlandArthur Lok Jack Graduate School of Business, The University of the West Indies, Trinidad, W.I.Association for Liberal Thinking, TurkeyThe Ukrainian Center for Independent Political Research, UkraineThe Institute of Economic Affairs, United KingdomCATO Institute, USAThe Centre for the Dissemination of Economic Knowledge (CEDICE), VenezuelaResearch Center for Entrepreneurship and Development Policies, VietnamFree Market Center (FMC), YugoslaviaZambia Institute for Public Policy Analysis (ZIPPA), Zambia
9Sample of Press Coverage for Fraser Institute’ Economic Freedom of the World 2005All Africa, AfricaAsia Pulse, AustraliaAustralian Financial Review, AustraliaScoop, AustraliaLatin America News Digest, BrazilCapital Weekly, BulgariaEl Diario de Hoy, Central AmericaDiario Financiero, ChileEl Financiero, ChileXinhua News Agency, ChinaSouth China Morning Post, ChinaChina Daily-Hong Kong Edition, ChinaAmbiito Juridico, ColombiaPortafolio, ColombiaLa Prensa Libre, Costa RicaEl Financiero, Costa RicaHina, CroatiaHospodarske Noviny, Czech RepublicBorsen, DenmarkJyllands-Posten, DenmarkBaltic Business Weekly, EstoniaBBC Monitoring, EuropeRadio Liberty, GeorgiaFrankfurter Allgemeine, GermanyVereinigte, GermanyFinancial Express, IndiaHindustan Times, IndiaJournal of Commerce, InternationalEl Cronista Comercial, InternationalEl Nacional, InternationalInternational Herald Tribune, InternationalIsrael Business Arena, IsraelJerusalem Post, IsraelItaliaOggi, ItalyIl Sole, ItalyIl Giornale, ItalyKorea Times, KoreaSeoul Daily, KoreaKorea Herald, KoreaNoticias Latinoamericanas, MexicoAgencia Mexicanan De Noticias, MexicoRepublika, MontenegroFinancial Times Deutschland, NetherlandsDominion Post, New ZealandTimes of Oman, OmanDaily times, PakistanRzeczpospolita, PolandLa Tribune, CanadaMontreal Gazette, CanadaRumanian, RomaniaSt. Petersburg Times, RussiaMoscow Times, RussiaInterfax, RussiaRussian Publication, RussiaPlenipotentiary, RussiaRepublika, Serbia/MontenegroVijesti, Serbia/MontenegroPobjeda, Serbia/MontenegroStraits Times, SingaporeEkonomicka Sloboda, SlovakiaHodin Daily, SlovakiaPravda Daily, SlovakiaBusiness Day, South AfricaEl Economista, SpainLibertad Digital, SpainL'Agefl Suisse, SwitzerlandBangkok Post, ThailandTrinidad Guardian, Trinidad & TobagoFinancial Times, UKInvestor's Business Daily, USFinancial Times, USEl Nacional, Venezuela
20Size of Government and the Top 10 Source: The Fraser Institute.
21Size of Government and the Top 10 Source: The Fraser Institute.
22Size of Government and the Top 10 Source: The Fraser Institute.
23Legal System and Property Rights and the Top 10 Source: The Fraser Institute.
24Legal System and Property Rights and the Top 10 Source: The Fraser Institute.
25Legal System and Property Rights and the Top 10 Source: The Fraser Institute.
26Sound Money and the Top 10Source: The Fraser Institute.
27Sound Money and the Top 10Source: The Fraser Institute.
28Sound Money and the Top 10Source: The Fraser Institute.
29Freedom to Trade Internationally and the Top 10 Source: The Fraser Institute.
30Freedom to Trade Internationally and the Top 10 Source: The Fraser Institute.
31Freedom to Trade Internationally and the Top 10 Source: The Fraser Institute.
32Regulations and the Top 10 Source: The Fraser Institute.
33Regulations and the Top 10 Source: The Fraser Institute.
34Regulations and the Top 10 Source: The Fraser Institute.
35Credit Market Regulations and the Top 10 Source: The Fraser Institute.
36Credit Market Regulations and the Top 10 Source: The Fraser Institute.
37Credit Market Regulations and the Top 10 Source: The Fraser Institute.
38Labor Market Regulations and the Top 10 Source: The Fraser Institute.
39Labor Market Regulations and the Top 10 Source: The Fraser Institute.
40Labor Market Regulations and the Top 10 Source: The Fraser Institute.
41Business Regulations and the Top 10 Source: The Fraser Institute.
42Why is Economic Freedom Important? Economic rights are fundamental rights in the sense that without them there can be no political freedom or civil freedomsThey are a prerequisite for growth and developmentThey are a prerequisite for broader human development
50Economic Freedom and Foreign Aid: Millennium Development GoalsHalving poverty by 2015Lack of empirical evidence on the effectiveness of aid
51Economic Freedom and Foreign Aid: Background:As of 2000, approximately 75% of world’s poor live in AfricaIn 1970, less than 15 percent of world’s poor lived in the regionFrom 1970 to 2000, Africa received $400 billions in foreign aidAid has growth continuously from 5% of GNI to 18% in 1995 when it peaked.
52Economic Freedom and Foreign Aid: New Research by professor William Easterly:Foreign aid has no positive impact on economic growth in poor nationsThis indicates that the “push” from foreign aid is ineffective in breaking the poverty trapEasterly shows that once economic freedom is controlled for, poor nations grow faster than rich nations
53Policy Implications:Efforts to reduce poverty may not produce the resultsPolicy should be to promote economic freedomEconomic freedom has been shown to promote economic prosperity (and many other good outcomes)
59Economic Freedom Versus Corruption Higher value indicates lower level of corruption Least Free ………….. Most FreeSources: The Fraser Institute; Transparency International, Corruption Perceptions Index 2005, available at
60Least Free ……………. Most Free Economic Freedom and Political Rights Lower ratings indicate higher level of political rightsLeast Free ……………. Most FreeSources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, through 2004, available at
61Economic Freedom and Civil Liberties Lower ratings indicate higher level of civil liberties Least Free …….. Most FreeSources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 1972 through 2004, available at
62The impact of Economic Freedom on the UN’s Human Development Index and other indicators of well-being
63Human Development Index and Economic Freedom Quartiles Least Free ……………. Most FreeSources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2005, available at
64Life Expectancy at Birth and Economic Freedom Quartiles Least Free ……………. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators CD- ROM, 2005.
65Infant Mortality and Economic Freedom Quartile Least Free ………..…. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.
66Economic Freedom and Labor force, children 10-14 (% of age group) Least Free ……………. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.
67% of Population Using Improved Water Sources Least Free …………….. Most FreeSources: The Fraser Institute; The World Bank, World Development Indicators CD-ROM, 2005.
68Economic Freedom and Happiness Causes of Happiness, 68 nation studyVariables included:IncomeEconomic GrowthInflationOnly two variables had large effects:Economic FreedomLife ExpectancyUnemploymentEducationPolitical freedom