Rule of Law in Asia

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Rule of Law in Asia

• By Dr. Mark Mullins, Executive Director
• The Fraser Institute
• Presentation Prepared for Economic Freedom
  Network Asia Conference
• Manila, Philippines, September 18-20, 2008

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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
• 20 year project
• Led by Professor Milton Friedman, Rose Friedman
  and Michael Walker
• Involved 60 of the worlds top scholars

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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 42 government policies affecting
  economic freedom based on objective data or
  independent surveys
• 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
• Now a collaboration of Institutes in over 70
  different countries

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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

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Economic Freedom of the World Index

• Size of Government Expenditures, Taxes, and
  Enterprises
• Legal Structure and Security of Property Rights
• Access to Sound Money
• Freedom to Trade Internationally
• Regulation of Credit, Labor, and Business
• Based entirely on objective, third party data or
  independent surveys for 141 countries

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Talk about making a difference
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Member Institutes of the Economic Freedom of the
World Network
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 Cambodia Institute of Development
Study, Cambodia The Fraser Institute,
Canada 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, Audentes University,
Estonia Association pour la Liberté Economique et
le Progrès Social (ALEPS), France
Society for Disseminating Economic KnowledgeNew
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 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
(CEED), Montenegro The Prosperity Foundation,
Nepal The New Zealand Business Roundtable, New
Zealand Institute of Public Policy Analysis,
Nigeria 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 Free Society Institute (FSI),
Slovenia 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 and Tobago 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
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Sample of Press Coverage for Fraser Institutes
Economic Freedom of the World 2007

• Dawn, Pakistan
• Invertia Peru, Peru
• Philippine Daily Enquirer, Philippines
• Poland Press, Poland
• Rompres, Romania
• Russian Paper, Russia
• Blic Online, Serbia
• Finance, Slovenia
• Izvoznookno, Slovenia
• Slovanian Press agency, Slovenia
• The Strait Times, Singapore
• IVO.co.za, South Africa
• Mail and Guardian, South Africa
• News 24, South Africa
• Actualidad Economica, Spain
• Agencia EFE, Spain
• Europa Press, Servicio Economico,
• Spain
• Invertia, Spain

All Africa, Africa Business Day,
Africa Business.lafrica.com, Africa La Nacion,
Argentina Universia, Argentina Hetq Online,
Armenia Gulf Daily News, Bahrain Zero Hora,
Brazil Portal Acionista, Brazil O'Globo,
Brazil Sofia Echo, Bulgaria Bulgarian Paper,
Bulgaria Calgary Sun, Canada Globe and Mail,
Canada National Post, Canada Toronto Sun,
Canada Toronto Star, Canada Vancouver Sun,
Canada China Post, China China Knowledge online,
China Xinhua News, China Chinese Paper,
China Business Day, Colombia Listin Diaro,
Dominican Republic El Universon, Ecuador Faz.net,
Germany German paper, Germany Die Presse,
Germany Hong Kong Daily, Hong Kong Living in Hong
Kong, Hong Kong Portfolio, Hungary Business
Standard, India India Paper, India
Business Standard, International El Economista,
International Economist, International US4Arabs,
International Reuters, International Globes
Israel, Israel Israel Business Area,
Israel Jerusalem Post, Israel Il Sole, Italy Al
Ghad, Jordan Alrai Newspaper, Jordan Addustour
Newspaper, Jordan Greaterkashmir.com,
Kashmir Donga Daily, Korea Segye Daily,
Korea Baltic Business Weekly, Latvia Latvian News
Agency, Latvia Baltic Business Weekly,
Latvia Nufooz web, Lebanon Edge Financial,
Malaysia Edge Daily, Malaysia Agencia Mexicana de
Noticias, Mexico La Jordana, Mexico La Cronica,
Mexico UB Post, Mongolia Republika,
Montenegro Market Montenegro, Montenegro Scoop,
New Zealand Press, New Zealand Arabic Paper,
Oman Oman Tribune, Oman Times of Oman,
Oman Pakistan Press International, Pakistan The
Post, Pakistan Pakistan Defence, Pakistan AHN,
Pakistan
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Sub-National and Regional Indices
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Economic Freedom Index of Indian States
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Marketization Index of Chinese Provinces
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Economic Freedom Index of Argentine Provinces
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Economic Freedom of the Arab World
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Economic Freedom Index of German States
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Economic Freedom of North America
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Economic Freedom of the World 2008
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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
  or civil freedoms
• They are a prerequisite for growth and
  development
• They are a prerequisite for broader human
  development

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Economic Freedom of the World Index

• Size of Government Expenditures, Taxes, and
  Enterprises
• Legal Structure and Security of Property Rights
• Access to Sound Money
• Freedom to Trade Internationally
• Regulation of Credit, Labor, and Business

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Legal Structure and Security of Property Rights

• A Judicial independence
• B Impartial courts
• C Protection of property rights
• D Military interference in rule of law and the
  political process
• E Integrity of the legal system
• F Legal enforcement of contracts
• G Regulatory restrictions on the sale of real
  property

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Legal System and Property Rights
Source The Fraser Institute.
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Legal System and Property Rights
Source The Fraser Institute.
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Judicial Independence

• Source Global Competitiveness Report, World
  Economic Forum (based on a survey of
  business decision-makers)
• Question
• Is the judiciary in your country independent
  from political influences of members of
  government, citizens, or firms? No-heavily
  influenced (1) or Yes-entirely independent
  (7).

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Judicial Independence
Source The Fraser Institute.
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Judicial Independence
Source The Fraser Institute.
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Impartial Courts

• Source Global Competitiveness Report, World
  Economic Forum (based on a survey of
  business decision-makers)
• Question
• The legal framework in your country for private
  businesses to settle disputes and challenge the
  legality of government actions and/or regulations
  is inefficient and subject to manipulation (1)
  or is efficient and follows a clear, neutral
  process (7).
• Note The Rule of Law ratings from the World
  Banks Governance Indicators Project have been
  used to fill in country omissions in the primary
  data source since 1995.

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Impartial Court
Source The Fraser Institute.
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Impartial Courts
Source The Fraser Institute.
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Protection of Property Rights

• Source Global Competitiveness Report, World
  Economic Forum (based on a survey of
  business decision-makers)
• Question
• Property rights, including over financial
  assets are poorly defined and not protected by
  law (1) or are clearly defined and well
  protected by law (7).

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Protection of Property Rights
Source The Fraser Institute.
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Protection of Property Rights
Source The Fraser Institute.
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Military Interference in Rule of Law and the
Political Process

• Source International Country Risk Guide,
  Political Risk Services (computed from an
  in-house panel of experts)
• Political Risk Component G (Military in
  Politics)
• A measure of the military's involvement in
  politics. Since the military is not elected,
  involvement, even at a peripheral level,
  diminishes democratic accountability. Military
  involvement might stem from an external or
  internal threat, be symptomatic of underlying
  difficulties, or be a full-scale military
  takeover. Over the long term, a system of
  military government will almost certainly
  diminish effective governmental functioning,
  become corrupt, and create an uneasy environment
  for foreign businesses.
• Note The Political Stability and Absence of
  Violence ratings from the World Banks
  Governance Indicators Project have been used to
  fill in country omissions in the primary data
  source since 1995.

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Military Interference in Rule of Law and the
Political Process
Source The Fraser Institute.
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Military Interference in Rule of Law and the
Political Process
Source The Fraser Institute.
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Integrity of the Legal System

• Source International Country Risk Guide,
  Political Risk Services (computed from an
  in-house panel of experts)
• Political Risk Component I (Law and Order)
• Two measures comprising one risk component.
  Each sub-component equals half of the total. The
  law sub-component assesses the strength and
  impartiality of the legal system, and the order
  sub-component assesses popular observance of the
  law.

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Integrity of the Legal System
Source The Fraser Institute.
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Integrity of the Legal System
Source The Fraser Institute.
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Legal Enforcement of Contracts

• Source Doing Business Dataset, World Bank
• Enforcing Contracts the time and money required
  to collect a clear cut debt
• time (days)
• cost ( of debt)

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Legal Enforcement of Contracts
Source The Fraser Institute.
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Regulatory Restrictions on the Sale of Real
Property

• Source Doing Business Dataset, World Bank
• Registering Property time and monetary costs
  required to transfer ownership of property that
  includes land and a warehouse
• time (days)
• cost ( of property value)

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Regulatory Restrictions on the Sale of Real
Property
Source The Fraser Institute.
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Websites

• www.freetheworld.com
• www.fraserinstitute.org

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Rule of Law in Asia

• By Dr. Mark Mullins, Executive Director
• The Fraser Institute
• Presentation Prepared for Economic Freedom
  Network Asia Conference
• Manila, Philippines, September 18-20, 2008