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

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  • 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.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22437.

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Date of creation: Nov 2009
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Handle: RePEc:pra:mprapa:22437

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Keywords: Economic Freedom; Capitalism; Governance; Economic Policy; Economic Development;

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  1. 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.
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  18. Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
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Cited by:
  1. 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.
  2. 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.

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