Deep determinants of economic freedom

In this chapter, I review the literature on the deep determinants of economic freedom. I trace the origin of economic freedom among our species to the subsistence strategies of hunter-gatherers that dominated the earth during most of our history. Hunter-gatherers were highly mobile, had no property rights to land, and used exit as the main strategy for conflict resolution. After the transition to sedentary agriculture around 11,000 years ago, physical capital accumulation increased and property rights to food and land emerged. The possible increase in economic freedom during agriculture from property rights was arguably offset by the natural restrictions to mobility, the greater interdependence in food production, and the emergence of powerful elites and states that extracted tributes from the population. Lastly, I show empirically that basic geographic and climatic factors such as elevation and temperature still explain almost half of the contemporary cross-country variation in economic freedom.