tailieunhanh - The Benefits of Economic Freedom

In 1776, Adam Smith wrote An Inquiry into the Nature and Causes of the Wealth of Nations. Economists have been busily exam- ining the issue ever since. It is one of the most widely studied topics in the field of economics. One of the most common findings relates to how economic activity is organized. For example, capitalist coun- tries (those in which economic activity occurs on the basis of volun- tary exchange within private markets) tend to grow faster than socialist countries (those in which economic activity is organized by government). The existence of private property rights in capitalist countries helps create stronger incentives for individuals to be. | The Benefits of Economic Freedom A Survey ----------- -------------- NICLAS BERGGREN The absence of economic growth implies the continued existence of poverty and hardship. The International Monetary Fund IMF 2001 and others now perceive the prospects for global economic growth to be relatively weak. Neoclassical economic theory explains economic growth as a function of changes in four factors capital labor human capital and technology Romer 1990 but the question remains Which economic policies are most favorable to growth A new line of research on economic freedom answers as Adam Smith did long ago. Economic freedom means the degree to which a market economy is in place where the central components are voluntary exchange free competition and protection of persons and property Gwartney and Lawson 2002 5 . The goal is to characterize the institutional structure and central parts of economic policy. Economic freedom may constitute an explanatory factor for growth and the distribution of income. In econometric analysis economic freedom is thus an independent variable. However economic freedom may also be affected by other variables and thereby constitute a dependent variable possibly influenced by factors such as political freedom wealth or democracy. 1 The most ambitious attempt to quantify economic freedom is the Economic Freedom Index EFI reported annually in Economic Freedom of the World Gwartney Niclas Berggren is an economist at the Ratio Institute in Stockholm Sweden. 1. Economic freedom also may have an intrinsic value irrespective of whether economic growth or other economic variables benefit from it if so the second track with economic freedom as a dependent variable likewise becomes interesting. The Independent Review v. VIII n. 2 Fall 2003 ISSN 1086-1653 Copyright 2003 pp. 193-211. 193 194 NICLAS Berggren and Lawson 2002 .2 3 Since 1996 data updated yearly have been published and the data now cover the years 1970 1975 1980 1985 1990 1995 and 2000. These .