Is “economic freedom” strictly free market capitalism? A decompositional analysis of the Economic Freedom of the World index
AbstractThe 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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 22437.
Date of creation: Nov 2009
Date of revision:
Economic Freedom; Capitalism; Governance; Economic Policy; Economic Development;
Find related papers by JEL classification:
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- P5 - Economic Systems - - Comparative Economic Systems
- P1 - Economic Systems - - Capitalist Systems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-08 (All new papers)
- NEP-DEV-2010-05-08 (Development)
- NEP-HPE-2010-05-08 (History & Philosophy of Economics)
- NEP-SOC-2010-05-08 (Social Norms & Social Capital)
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