Economic Freedom of the World: 2002 Annual Report

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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

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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

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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 worlds top economists and
  political scientists

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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 worlds 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

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Introducing the 2002 Economic Freedom of the
World Index Results
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The top ten and how they got there
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Countries with significant deterioration since
1970
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Economic Freedom in Africa
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More African Countries
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Economic Freedom on the march.
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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

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The impact on economic growth and development
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Income (per person) of the Bottom Ten
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Per Capita Income and Economic Freedom Quintile
Least Free .. Most Free
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Growth in Real GDP Per Capita and Economic
Freedom Quintile
Least Free .... Most Free
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Per Capita Income of poorest 10 and Economic
Freedom
Least Free .. Most Free
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The impact on human development

• The United Nations Development Index

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Economic Freedom and Human Development
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Life Expectancy at Birth, 1999, and Economic
Freedom Quintiles
Least Free . Most Free
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1999,Adult Illiteracy rate, ( of population age
15 and above) by Economic Freedom Quintile
Least Free .... Most Free
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Human Poverty Index and Economic Freedom Quintile
Least Free ... Most Free
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Infant Mortality and Economic Freedom Quintile
Least Free ... Most Free
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Child Malnutrition and Economic Freedom Quintile
Least Free ..Most Free
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Economic Freedom and Child Labor (proportion of
children 5-14 years of age working, 2000)
Least Free . Most Free
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Access to Essential Drugs, 1999, and Economic
Freedom Quintiles
Least Free ..Most Free
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of Population Using Improved Water Sources, 1999
Least Free .. Most Free
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Economic Freedom Versus Corruption
Least Free .. Most Free
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Political Stability and Economic Freedom Quintile
Least Free .. Most Free
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Political Rights Civil Liberties
Least Free Most Free
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Focus on Mauritius
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Focus on Botswana
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In Africa, Botswana and South Africa score the
best.
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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.

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