Robert Lawson

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Using The Economic Freedom of the World Index

• Robert Lawson
• Professor of Economics
• George H. Moor Chair
• Capital University
• Columbus, Ohio USA

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(No Transcript)
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Measuring Economic Freedom

• Economic freedom is complex and multidimensional,
  but it can be measured
• Individual choice
• Freedom to trade, domestically and abroad.
• Freedom to enter and compete in markets.
• Security of Property/Rule of Law
• No country perfectly conforms to the free-market
  idealall economies are mixed economies.

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Methodology

• We collect data on 130 countries using 38
  different components grouped into five broad
  areas.
• 0-10 ratings are constructed to measure the
  degree to which the country conforms to the
  free-market ideal.
• Third-Party data from World Bank, IMF, Global
  Competitiveness Report, IMD, etc.
• Objective data
• Survey data

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5 Areas of Economic Freedom of the World (EFW)
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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Highest Economic Freedom Ratings, 2004
Source EFW 2006, Exhibit 1.2.
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Economic Freedom Ratings of Selected Countries,
2004
Source EFW 2006, Exhibit 1.2.
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Area 1 Size of Government
Source EFW 2006, Exhibit 1.3.
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Area 2 Legal Structure and Property Rights
Source EFW 2006, Exhibit 1.3.
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Area 2A Judicial Independence
Original Source Global Competitiveness Report
Survey Question The judiciary is independent and
not subject to interference by the government or
parties in disputes
Source EFW 2006, Country Tables
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Area 3 Sound Money
Source EFW 2006, Exhibit 1.3.
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Area 4 Freedom to Trade Internationally
Source EFW 2006, Exhibit 1.3.
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Area 5 Regulation of Credit Markets, Labor
Markets, and Business
Source EFW 2006, Exhibit 1.3.
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Economic Freedom and Income
Source EFW 2006, Exhibit 1.6.
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Economic Freedom and Growth
Source EFW 2006, Exhibit 1.7.
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Economic Freedom and Unemployment
Source EFW 2006, Exhibit 1.8 .
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Economic Freedom and Life Expectancy
Source EFW 2006, Exhibit 1.9.
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Economic Freedom and Infant Mortality
Source EFW 2006, Exhibit 1.10.
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Economic Freedom and Child Labor
Source EFW 2006, Exhibit 1.11.
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Economic Freedom and Improved Water
Source EFW 2006, Exhibit 1.12.
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Economic Freedom and Income Share of Poorest 10
Source EFW 2006, Exhibit 1.13.
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Economic Freedom and Income Level of Poorest 10
Source EFW 2006, Exhibit 1.14.
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Economic Freedom and Human Development
Source EFW 2006, Exhibit 1.15.
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Economic Freedom and Political Rights and Civil
Liberties
Lower ratings indicate greater political rights
and civil liberties. Source EFW 2006, Exhibit
1.16.
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Economic Freedom and Corruption
Source EFW 2006, Exhibit 1.17.
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Economic Freedom and Globalization
Lower rankings indicate more globalization Source
EFW 2006, Exhibit 1.18.
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Economic Freedom and Environmental Performance
Source EFW 2006, Exhibit 1.19.
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Map
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Website