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The Relationship between Economic Freedom and Poverty Rates: Cross-Country Evidence

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  • Colin Doran
  • Thomas Stratmann

Abstract

We study the relationship between economic freedom and poverty rates in 151 countries over a twenty-year period. Using the World Bank's poverty headcounts of those living on less than $1.90 per day, $3.20 per day, and $5.50 per day, we find evidence that economic freedom, measured by the Heritage Foundation's Index of Economic Freedom, is associated with lower poverty rates. We also test the effect of various components of the Index of Economic Freedom.We find thata government's integrity and a country's trade freedom are associated with lower poverty rates. We check the robustness of our results using alternative freedom indices.

Suggested Citation

  • Colin Doran & Thomas Stratmann, 2020. "The Relationship between Economic Freedom and Poverty Rates: Cross-Country Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(4), pages 686-707.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2020-0042
    DOI: 10.1628/jite-2020-0042
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    Cited by:

    1. Jun Wen & Lingxiao Li & Xinxin Zhao & Chenyang Jiao & Wenjie Li, 2022. "How Government Size Expansion Can Affect Green Innovation—An Empirical Analysis of Data on Cross-Country Green Patent Filings," IJERPH, MDPI, vol. 19(12), pages 1-22, June.
    2. Brychka, Bohdan & Vyslobodska, Halyna & Voitovych, Nadiia, 2023. "Poverty in Ukraine: evolution of interpreting and analysis of impact factors," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(2), June.

    More about this item

    Keywords

    poverty; freedom; government; trade;
    All these keywords.

    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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