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Market‐oriented institutions and policies and economic growth: A critical survey

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  • Jakob De Haan
  • Susanna Lundström
  • Jan‐Egbert Sturm

Abstract

. This paper surveys recent evidence suggesting that market‐oriented institutions and policies are strongly related to economic growth, focusing on studies using the economic freedom (EF) indicator of the Fraser Institute. This index is critically discussed. Also various serious shortcomings of empirical studies using this index are identified. Nevertheless, there are strong indications that liberalization, i.e. an increase in the EF index, stimulates economic growth. This paper also reviews studies on the determinants of EF. Political liberalization is often found to enhance economic liberalization, whereas there is less evidence for causality running in the other direction.

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  • 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.
  • Handle: RePEc:bla:jecsur:v:20:y:2006:i:2:p:157-191
    DOI: 10.1111/j.0950-0804.2006.00278.x
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