Cultural Impact on Economic Freedom in OECD Member Countries

The new institutional economic theory working with the concept of transaction costs assumes a quality setting of formal and informal institutions for an effectively functioning economic system. In an economic freely environment, we can assume a lower level of transaction costs. The main aim of the presented article is to identify Hofstede’s cultural dimensions that have a combined impact with the Human Development Index on economic freedom measured by The Heritage Foundation Index of Economic Freedom in OECD member countries. We used instruments of quantitative analysis, namely correlation and multiple regression analysis. We confirmed a negative impact of power distance and uncertainty avoidance on The Heritage Foundation Index of Economic Freedom. Countries with higher values of the Human Development Index achieve better score in The Index of Economic Freedom. In literature review and discussion we open the question of cancel culture in context of economic freedom for further research and we recommend the application of the concept of economic freedom in accordance with the principle of subsidiarity. However, the importance of economic freedom appears differently for diverse groups of countries.