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Unleashing Potential: How Economic Freedom Drives Growth in Developing Economies

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  • Muhammed Benli
  • Hatice Taş
  • Aykut Ekinci

Abstract

This study analyzes the impact of economic freedom and economic growth in 51 developing countries for the period 2000–2021. Using panel cointegration and dynamic panel GMM estimators, we test whether institutional quality—as reflected by economic freedom—drives long‐run income growth. The results indicate a persistent positive effect of economic freedom on GDP per capita, consistent across different estimation techniques. Investment also contributes positively to growth, while labor effects are more heterogeneous. These findings underscore the importance of institutional reforms that strengthen market efficiency and reduce regulatory barriers in sustaining economic growth across developing economies.

Suggested Citation

  • Muhammed Benli & Hatice Taş & Aykut Ekinci, 2026. "Unleashing Potential: How Economic Freedom Drives Growth in Developing Economies," The World Economy, Wiley Blackwell, vol. 49(4), pages 729-742, April.
    • Handle: RePEc:bla:worlde:v:49:y:2026:i:4:p:729-742
    DOI: 10.1111/twec.70057
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