IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/22437.html
   My bibliography  Save this paper

Is “economic freedom” strictly free market capitalism? A decompositional analysis of the Economic Freedom of the World index

Author

Listed:
  • Cohen, Joseph N

Abstract

The Frasier Institute’s Economic Freedom of the World is often taken as a metric of market capitalism. This paper argues that the index is an amalgam of measures capturing free markets and good governance, and analysts should remain cognizant of this conceptual conflation when using the index to develop policy prescriptions. Implicitly, the “economic freedom” literature suggests that countries embrace an “Anglo-Swiss” policy model, although the rich world offers alternative models that maximize good governance but not liberalization. Factor analyses suggest that the index’s Legal System & Property Rights component is more closely related to outside governance metrics that do not imply market liberalism than other “economic freedom” constituent measures.

Suggested Citation

  • Cohen, Joseph N, 2009. "Is “economic freedom” strictly free market capitalism? A decompositional analysis of the Economic Freedom of the World index," MPRA Paper 22437, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:22437
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/22437/1/MPRA_paper_22437.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/33676/3/MPRA_paper_33676.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kolodko, Grzegorz W., 2000. "From Shock to Therapy: The Political Economy of Postsocialist Transformation," OUP Catalogue, Oxford University Press, number 9780198297437.
    2. Jakob De Haan & Susanna Lundström & Jan‐Egbert Sturm, 2006. "Market‐oriented institutions and policies and economic growth: A critical survey," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 157-191, April.
    3. Scott Sumner, 2004. "How Have Monetary Regime Changes Affected the Popularity of IS-LM?," History of Political Economy, Duke University Press, vol. 36(5), pages 240-270, Supplemen.
    4. Polak, J.J., 1991. "The Changing Nature of IMF Conditionality," Princeton Studies in International Economics 184, International Economics Section, Departement of Economics Princeton University,.
    5. Steven B. Caudill & Fernando C. Zanella & Franklin G. Mixon, Jr., 2000. "Is Economic Freedom One Dimensional? A Factor Analysis of Some Common Measures of Economic Freedom," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(1), pages 17-40, June.
    6. Carlsson, Fredrik & Lundstrom, Susanna, 2002. "Economic Freedom and Growth: Decomposing the Effects," Public Choice, Springer, vol. 112(3-4), pages 335-344, September.
    7. Gwartney, James & Lawson, Robert, 2003. "The concept and measurement of economic freedom," European Journal of Political Economy, Elsevier, vol. 19(3), pages 405-430, September.
    8. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    9. Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
    10. Doucouliagos, Chris & Ulubasoglu, Mehmet Ali, 2006. "Economic freedom and economic growth: Does specification make a difference?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 60-81, March.
    11. Peacock, Alan & Scott, Alex, 2000. "The Curious Attraction of Wagner's Law," Public Choice, Springer, vol. 102(1-2), pages 1-17, January.
    12. Niclas Berggren & Henrik Jordahl, 2005. "Does free trade really reduce growth? Further testing using the economic freedom index," Public Choice, Springer, vol. 122(1), pages 99-114, January.
    13. repec:bla:kyklos:v:53:y:2000:i:4:p:527-44 is not listed on IDEAS
    14. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    15. Hall, Peter A. & Soskice, David (ed.), 2001. "Varieties of Capitalism: The Institutional Foundations of Comparative Advantage," OUP Catalogue, Oxford University Press, number 9780199247752.
    16. Jacques J. Polak, 1991. "The Changing Nature of IMF Conditionality," OECD Development Centre Working Papers 41, OECD Publishing.
    17. Bruton, H.J., 1998. "A Reconsideration of Import Substitution," Center for Development Economics 156, Department of Economics, Williams College.
    18. Alesina, Alberto & Özler, Sule & Roubini, Nouriel & Swagel, Phillip, 1996. "Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
    19. Henry J. Bruton, 1998. "A Reconsideration of Import Substitution," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 903-936, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2011. "Are ‘New’ Donors Different? Comparing the Allocation of Bilateral Aid Between nonDAC and DAC Donor Countries," World Development, Elsevier, vol. 39(11), pages 1950-1968.
    2. Cohen, Joseph N, 2011. "“Economic freedom” and economic growth: questioning the claim that freer markets make societies more prosperous," MPRA Paper 33758, University Library of Munich, Germany.
    3. Cohen, Joseph N, 2010. "Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis?," MPRA Paper 24527, University Library of Munich, Germany.
    4. Dreher, Axel & Nunnenkamp, Peter & Thiele, Rainer, 2010. "Are 'new' donors different? Comparing the allocation of bilateral aid between non-DAC and DAC donor," University of Göttingen Working Papers in Economics 96, University of Goettingen, Department of Economics.
    5. Cohen, Joseph N, 2010. "Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis?," MPRA Paper 24399, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Judit Kapás & Pál Czeglédi, 2017. "Institutions and policies of economic freedom: different effects on income and growth," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 34(2), pages 259-282, August.
    2. Zuazu, Izaskun, 2019. "The growth effect of democracy and technology: An industry disaggregated approach," European Journal of Political Economy, Elsevier, vol. 56(C), pages 115-131.
    3. Cohen, Joseph N, 2010. "Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis?," MPRA Paper 24527, University Library of Munich, Germany.
    4. Burcu ŞENALP, 2018. "Foreign Direct Investment, Economic Growth and Economic Freedom: A Literature Survey," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 68(2), pages 301-336, December.
    5. Cohen, Joseph N, 2010. "Neoliberalism’s relationship with economic growth in the developing world: Was it the power of the market or the resolution of financial crisis?," MPRA Paper 24399, University Library of Munich, Germany.
    6. Tanin, Tauhidul Islam & Masih, Mansur, 2017. "Does economic freedom lead or lag economic growth? evidence from Bangladesh," MPRA Paper 79446, University Library of Munich, Germany.
    7. Martin Rode & Sebastian Coll, 2012. "Economic freedom and growth. Which policies matter the most?," Constitutional Political Economy, Springer, vol. 23(2), pages 95-133, June.
    8. Jakob De Haan & Susanna Lundström & Jan‐Egbert Sturm, 2006. "Market‐oriented institutions and policies and economic growth: A critical survey," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 157-191, April.
    9. Claudia Williamson & Rachel Mathers, 2011. "Economic freedom, culture, and growth," Public Choice, Springer, vol. 148(3), pages 313-335, September.
    10. Jac C. Heckelman & Bonnie Wilson, 2013. "Institutions, Lobbying, and Economic Performance," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 360-386, November.
    11. Cong Tam Trinh & Xuan Nguyen & Pasquale Sgro, 2021. "Culture and the demand for non‐life insurance: Empirical evidences from middle‐income and high‐income economies," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 29(3), pages 431-458, July.
    12. Cohen, Joseph N, 2011. "“Economic freedom” and economic growth: questioning the claim that freer markets make societies more prosperous," MPRA Paper 33758, University Library of Munich, Germany.
    13. Bernur Acikgoz & Anthony Amoah Author-Email: a.amoah@uea.ac.uk & Mine Yılmazer, 2016. "Economic Freedom and Growth: A Panel Cointegration Approach," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(5), pages 541-562, December.
    14. Compton, Ryan A. & Giedeman, Daniel C. & Hoover, Gary A., 2011. "Panel evidence on economic freedom and growth in the United States," European Journal of Political Economy, Elsevier, vol. 27(3), pages 423-435, September.
    15. Martin Rode & Julio Revuelta, 2015. "The Wild Bunch! An empirical note on populism and economic institutions," Economics of Governance, Springer, vol. 16(1), pages 73-96, February.
    16. Bergh, Andreas & Nilsson, Therese, 2010. "Do liberalization and globalization increase income inequality?," European Journal of Political Economy, Elsevier, vol. 26(4), pages 488-505, December.
    17. Renato Santiago & José Alberto Fuinhas & António Cardoso Marques, 2020. "The impact of globalization and economic freedom on economic growth: the case of the Latin America and Caribbean countries," Economic Change and Restructuring, Springer, vol. 53(1), pages 61-85, February.
    18. repec:ces:ifodic:v:11:y:2013:i:2:p:19094731 is not listed on IDEAS
    19. Indra Soysa & Krishna Vadlammanati, 2013. "Do pro-market economic reforms drive human rights violations? An empirical assessment, 1981–2006," Public Choice, Springer, vol. 155(1), pages 163-187, April.
    20. Sayari, Naz & Sari, Ramazan & Hammoudeh, Shawkat, 2018. "The impact of value added components of GDP and FDI on economic freedom in Europe," Economic Systems, Elsevier, vol. 42(2), pages 282-294.
    21. Berggren, Niclas & Bergh, Andreas & Bjørnskov, Christian, 2012. "The growth effects of institutional instability," Journal of Institutional Economics, Cambridge University Press, vol. 8(2), pages 187-224, June.

    More about this item

    Keywords

    Economic Freedom; Capitalism; Governance; Economic Policy; Economic Development;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P5 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:22437. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.