Economic Freedom of the World: 2002 Annual Report Presentation to Fraser Institute Press Conference Calgary June 24, 2002 Fred McMahon and Michael Walker The Fraser Institute

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 Objective: find a way to measure economic freedom and explore the connection between it and other variables 17 year project Led by Professor Milton Friedman, Rose Friedman and Michael Walker Involved 60 of the world’s top economists and political scientists

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 36 government policies affecting economic freedom based on objective data or independent surveys A ranking of 123 countries representing 91% of the world’s population according to the extent to which they permit their citizens to be economically free Now a collaboration of 55 Institutes in 55 different countries

Introducing the 2002 Economic Freedom of the World Index Results

The top ten and how they got there

Countries with significant deterioration since 1970

Economic Freedom in Africa

More African Countries

Economic Freedom on the march.

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

The impact on economic growth and development

Income (per person) of the Bottom Ten

Per Capita Income and Economic Freedom Quintile Least Free …….. Most Free

Growth in Real GDP Per Capita and Economic Freedom Quintile Least Free ……………..….. Most Free

Per Capita Income of poorest 10% and Economic Freedom Least Free …….. Most Free

The impact on human development The United Nations Development Index

Economic Freedom and Human Development

Life Expectancy at Birth, 1999, and Economic Freedom Quintiles Least Free ……………. Most Free

1999,Adult Illiteracy rate, (% of population age 15 and above) by Economic Freedom Quintile Countries in the 5th quintile are Hong Kong, Singapore, Chile, Portugal, United Arab Emirates, Panama, Oman, and Costa Rica. United Arab Emirates (24.9%) and Oman (29.7%) are causing the 5th quintile to be higher than the fourth quintile. Countries in the 4th Quintile are Spain, Jordan, Bahrain, El Salvador, Argentina, Mauritius, Trinidad and Tobago, Bahamas, Italy, Botswana, Kuwait, Korea, Rep. Of, Jamaica, Philippines, Peru, Greece, Israel, Uruguay, and South Africa. Least Free ……….... Most Free

Human Poverty Index and Economic Freedom Quintile Least Free …………..…. Most Free

Infant Mortality and Economic Freedom Quintile Least Free ………..…. Most Free

Child Malnutrition and Economic Freedom Quintile Least Free ……………..Most Free

Economic Freedom and Child Labor (proportion of children 5-14 years of age working, 2000) Least Free ……………. Most Free

Access to Essential Drugs, 1999, and Economic Freedom Quintiles Least Free …………..Most Free

% of Population Using Improved Water Sources, 1999 Least Free …………….. Most Free

Economic Freedom Versus Corruption Least Free ………….. Most Free

Political Stability and Economic Freedom Quintile Least Free ………..… Most Free

Political Rights & Civil Liberties Least Free …… Most Free

Focus on Mauritius

Focus on Botswana

In Africa, Botswana and South Africa score the best.

How important is it to have a sound legal structure with security of property rights and rule of law? Our analysis indicates that a legal structure that provides for evenhanded enforcement of contracts and security of property rights is vitally important. When it is absent, gains from trade will go unrealized and both entrepreneurship and investment will flow elsewhere. A comparison between the highest 20 and lowest 20 countries in the legal area illustrates this point. The average per capita GDP of the 20 highest rated countries in the legal area was $26,367 compared to an average of $2,629 for the 20 lowest rated countries. Similarly, the growth rate in the 1990s of the top 20 was 2.26% per year compared to -0.26% per year among the bottom 20.

Legal structure ratings and economic performance. Top 20 Countries Bottom 20 Countries

The End……phew! www.freetheworld.com www.fraserinstitute.ca