Economic Freedom of the World: 2004 Annual Report Fraser Institute Policy Briefing July 15 2004
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 20 year project Led by Professor Milton Friedman, Rose Friedman and Michael Walker Involved 100 of the world’s top scholars
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 38 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 Institutes in 62 different countries
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 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 or third party data from 123 countries
Talk about making a difference …
Member Institutes of Economic Freedom of the World Network Instituto Libertad y Desarrollo, Chile Instituto para la Libertad y el Análisis de Políticas, Costa Rica Liberales Institut, Germany Liberales Institut, Switzerland Liberální Institut, Czech Republic Lithuanian Free Market Institute, Lithuania Making Our Economy Right (MOER), Bangladesh The Nassau Institute, Bahamas The New Zealand Business Roundtable, New Zealand Open Republic Institute, Ireland The Pathfinder Foundation, Sri Lanka Romania Think Tank, Romania Scientific Research Mises Center, Belarus Society for Disseminating Economic Knowledge: "New Economic School-Georgia," Georgia Szazadveg Policy Research Center, Hungary TIGRA®, Austria Timbro, Sweden The Ukrainian Center for Independent Political Research, Ukraine D’Letzeburger Land, Luxembourg The Institute for Development of Economics and Finance, Indonesia Bureau d’Analyse d’Ingenierie et de Logiciels (BAILO), Ivory Coast African Research Center for Public Policy and Market Process, Kenya Albanian Center for Economic Research (ACER), Albania Alternate Solutions Institute, Pakistan Association for Liberal Thinking, Turkey Association pour la Liberté Economique et le Progrès Social (ALEPS), France Cato Institute, United States of America Center for the Dissemination of Economic Knowledge (CEDICE), Venezuela Center for Entrepreneurship and Economic Development (CEED), Montenegro Center for Free Enterprise, Korea Center for Politiske Studier, Denmark The Center for Research and Communication, Philippines Centre for Civil Society, India Centre for the New Europe, Belgium Centro Einaudi, Italy Centro de Investigación para el Desarrollo A.C., Mexico Centro de Investigación y Estudios Legales (CITEL), Peru Centro de Investigaciones Económicas Nacionales, Guatemala Centrum im. Adama Smitha, Poland The Estonian Institute for Open Society Research, Estonia The F.A. Hayek Foundation, Slovak Republic The Fraser Institute, Canada Free Market Centre, Serbia The Free Market Foundation of Southern Africa, South Africa Fundación DL, Colombia Fundación Economía y Desarrollo, Inc., Dominican Republic Fundación Libertad, Argentina Fundación Libertad, Panamá Fundación Libertad, Democracia y Desarrollo, Bolivia Hong Kong Centre for Economic Research, Hong Kong Institute for Advanced Strategic and Political Studies, Israel Institute for Market Economics, Bulgaria Institute of Business, Trinidad and Tobago The Institute of Economic Affairs, Ghana The Institute of Economic Affairs, United Kingdom Institute of Economic Analysis, Russia Institute of Economic Studies, Iceland The Institute of Economics, Croatia Institute of Public Affairs, Australia Institute of Public Policy Analysis, Nigeria Instituto Ecuatoriano de Economía Política, Ecuador Instituto Liberal do Rio de Janeiro, Brazil
Sample of Press Coverage for Fraser Institute’ Economic Freedom of the World 2003 Calgary Herald Edmonton Journal Globe and Mail La Presse National Post Toronto Star Ottawa Citizen Ottawa Sun Economist Info Bae, Argentina AFX-Asia Asia Pulse (3 article) ChannelnewsAsia Bahamas Paper Nassau Guardian Nassau Tribune Tribune, Bahamas Barbados Advocate People's Daily, China South China Morning Post Xinhua, China (3 articles) La Republica, Costa Rica (2 articles) Portafolio, Colombia Economia, Costa Rica La Nacion, Costa Rica La Republica, Costa Rica El Financiero, Ecuador Baltic News, Europe Deutsche Presse-Agentur World Markets, Europe Agence France Presse, France (2 articles) Focus, Germany Frankfurter Asia Times, Hong Kong Factiva, Hong Kong Hong Kong Imail Inter Press Service News Agency, Hong Kong Hindu, India Nationwide International News, India Dong-a Ilbo, Korea Hankook Ilbo, Korea JoongAng Daily, Korea Korea Times Kukmin Daily, Korea Kyunghyang Daily News, Korea Maeil Business Newspaper, Korea Segye Times, Korea Seoul Economic Daily Yonhap News, Korea La Sentinelle, Mauritius L'Express, Mauritius Business Story, New Zealand Dominion Post, New Zealand (2 articles) Evening Standard, New Zealand National Business Review, New Zealand (2 articles) Nelson Mail, New Zealand New Zealand Herald (3 articles) News, New Zealand Northern Advocate, New Zealand Sunday Star Times, New Zealand La Prensa, Panama Panama America Aaaii ii-ioaeiaio, Russia Arehtctbo Muk, Russia Hobocth Kutar, Russia Danas, Serbia Pregled, Serbia Factiva, Taiwan Central News Agency, Taiwan London Times Christian Science Monitor Reforma
Introducing the 2004 Economic Freedom of the World Index Results
Overall Economic Freedom Index and the Top Ten Source: The Fraser Institute.
The top ten and how they got there Source: The Fraser Institute.
Countries having significant improvement since 1970 Source: The Fraser Institute.
Countries having significant deterioration since 1970 Source: The Fraser Institute.
Overall Economic Freedom Index and the Bottom Ten Source: The Fraser Institute.
Economic Freedom Over Time Source: The Fraser Institute.
Economic Freedom in Canada
Size of Government and the Top Ten Source: The Fraser Institute.
Size of Government and the Top Ten Source: The Fraser Institute.
Legal System and Property Rights and the Top Ten Source: The Fraser Institute.
Legal System and Property Rights, 2000 (High Income OECD Countries) 8th Source: The Fraser Institute.
Legal System and Property Rights, 2002 (High Income OECD Countries) 14th Source: The Fraser Institute.
Legal System and Property Rights and the Top Ten Source: The Fraser Institute.
Judiciary Independence, 2000 (High Income OECD Countries) 7th Source: The Fraser Institute.
Judiciary Independence, 2002 (High Income OECD Countries) 15th Source: The Fraser Institute.
Judiciary Independence and the Top Ten Source: The Fraser Institute.
Impartial Courts, 2000 (High Income OECD Countries) 7th Source: The Fraser Institute.
Impartial Courts, 2002 (High Income OECD Countries) 21st Source: The Fraser Institute.
Impartial Courts and the Top Ten Source: The Fraser Institute.
Sound Money and the Top Ten Source: The Fraser Institute.
Sound Money and the Top Ten Source: The Fraser Institute.
Freedom to Trade Internationally and the Top Ten Source: The Fraser Institute.
Freedom to Trade Internationally and the Top Ten Source: The Fraser Institute.
Regulations and the Top Ten Source: The Fraser Institute.
Regulations and the Top Ten Source: The Fraser Institute.
Credit Market Regulations and the Top Ten Source: The Fraser Institute.
Credit Market Regulations and the Top Ten Source: The Fraser Institute.
Labor Market Regulations and the Top Ten Source: The Fraser Institute.
Labor Market Regulations and the Top Ten Source: The Fraser Institute.
Business Regulations and the Top Ten Source: The Fraser Institute.
Business Regulations, 2000 (High Income OECD Countries) 8th Source: The Fraser Institute.
Business Regulations, 2002 (High Income OECD Countries) 9th Source: The Fraser Institute.
Business Regulations and the Top Ten Source: The Fraser Institute.
Irregular Payments, 2000 (High Income OECD Countries) 6th Source: The Fraser Institute.
Irregular Payments, 2002 (High Income OECD Countries) 17th Source: The Fraser Institute.
Canada’s Score 2000 vs 2002 Selected Indicators Source: The Fraser Institute.
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 Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Income (per person) of the Top Ten Note that Luxembourg was not one of the top ten last year. Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Per Capita Income and Economic Freedom Quintile Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Growth in Real GDP Per Capita and Economic Freedom Quintile Least Free ……………..….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
New Research: Economic Freedom, Investment, and Growth
Regressions: Economic Freedom and the Productivity of Investment Source: The Fraser Institute.
Regressions: Changes in Economic Freedom and Economic Growth Source: The Fraser Institute.
Economic Freedom and Investment Per Worker, 1980-2000 Source: The Fraser Institute.
Economic Freedom and Total and Private Investment as a Share of GDP Source: The Fraser Institute.
Economic Freedom and Growth in Per Capita GDP, 1980-2000 The previous slide indicates the same thing. Source: The Fraser Institute.
Economic Freedom,the Poor, and Inequality
Human Poverty Index, 2001, and Economic Freedom Quintile Least Free …………..…. Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2003 (Online), http://hdr.undp.org/reports/global/2003/indicator/index.html (accessed on June 16, 2004).
Income Inequality, 1998-2002 Least Free …….. Most Free Percent of income accruing to the Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Income Share of the Poorest 10% and Economic Freedom Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Per Capita Income of Poorest 10% and Economic Freedom Least Free …….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Economic Freedom, Other Freedoms and Democracy
Economic Freedom Versus Corruption 10 =highly corrupt and 0 =highly clean Least Free ………….. Most Free Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index 2003 (Online).
Political Stability and Economic Freedom Quintile Least Free ………..… Most Free
Economic Freedom and Political Rights ten representing the highest degree of political rights and zero the lowest Least Free …… Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 1973-2003 (Online).
Economic Freedom and Civil Liberties ten representing the highest degree of civil liberties and zero the lowest Least Free …… Most Free Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings, 1973 to 2003 (Online).
The impact of Economic Freedom on the UN’s Human Development Index and other indicators of well-being
Human Development Index, 2001, and Economic Freedom Quintiles Least Free ……………. Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2003 (Online), available at http://www.undp.org/hdr2003/indicator/index_indicators.html (accessed on June 15, 2004).
Life Expectancy at Birth and Economic Freedom Quintiles Least Free ……………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Infant Mortality and Economic Freedom Quintile Least Free ………..…. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Adult Mortality (2000) and Economic Freedom Quintile Adult mortality rate is the probability of dying between the ages of 15 and 60--that is, the probability of a 15-year-old dying before reaching age 60, if subject to current age-specific mortality rates between ages 15 and 60. Least Free ………..…. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Economic Freedom and Labor force, children 10-14 (% of age group) Least Free ……………. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Access to Essential Drugs, 1999, and Economic Freedom Quintiles Least Free …………..Most Free Sources: The Fraser Institute; United Nations Development Programmme, Human Development Indicators 2002 (Online), available at http://hdr.undp.org/reports/global/2002/en/indicator/indicator.cfm?File=index.html (accessed on June 17, 2004)
% of Population Using Improved Water Sources, 2000 Least Free …………….. Most Free Sources: The Fraser Institute; The World Bank, World Development Indicators 2004 (Online).
Conclusions Economic Freedom spurs Increased prosperity for all Poverty reduction Other freedoms Reduces Probability of War Quality of life improvements All this can be seen in today’s data and lessons from history
www.freetheworld.com www.fraserinstitute.ca