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Economic Freedom, Economic Growth & Governments Tax Revenue in (MENA)

Author

Listed:
  • Morteza Sameti

    (Associate Professor of Isfahan University)

  • Mahshid Shahchera

    (PhD Student of Isfahan University)

Abstract

Economic freedom includes personal choice, voluntary exchange, freedom to compete, and protection of person and property. Institutions and policies are consistent with economic freedom when they provide infrastructures for voluntary exchange, and protect individuals and their property. Legal and monetary arrangements are particularly important: governments promote economic freedom when they provide a legal structure and law-enforcement system that protects the property rights of owners and en-forces contracts in an even-ended manner. They also enhance economic freedom when they facilitate access to sound money. On the other hand economic institutions that promote economic freedom are usually regarded as being fundamental for the process of economic growth. However, economic freedom also requires governments to refrain from many activities. They must refrain from actions that interfere with personal choice, voluntary exchange, and the freedom to enter and compete in labor and product markets and specially reduce the taxe rates. Since economic freedom could generate economic growth, government tax income will be increased but it depends on the optimal degree of economic freedom. Because the relationship between economic freedom and government tax income is U shape and has optimal point. In this paper, relationship among the economic freedom, economic growth and government tax revenue in MENA countries (During 1980 to 2002) have been measured and U shape hypothesis of relationship between economic freedom and the government tax income has been tested.

Suggested Citation

  • Morteza Sameti & Mahshid Shahchera, 2006. "Economic Freedom, Economic Growth & Governments Tax Revenue in (MENA)," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 10(3), pages 67-86, fall.
    • Handle: RePEc:eut:journl:v:10:y:2006:i:3:p:67
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