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Economic Freedom of the World Report 2012

Economic Freedom of the World Report 2012. Neil Emerick. Authors. 100 years since Milton Friedman was born. Gwartney & Lawson 1996 first year. 16 th report. Many studies cite the report.

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Economic Freedom of the World Report 2012

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  1. Economic Freedom of the World Report2012 Neil Emerick

  2. Authors • 100 years since Milton Friedman was born. • Gwartney & Lawson • 1996 first year. 16th report • Many studies cite the report. • Almost universally suggest that economic freedom leads to higher levels of investment, more rapid economic growth, higher income, rapid reduction in poverty rates

  3. Crisis!

  4. What is Economic Freedom

  5. Economic Freedom?

  6. Economic Freedom?

  7. Democracy vs Economic Freedom

  8. Democracy is not the same as Economic Freedom • Democracy = Political decision-making • EF = Decisions through markets • Democracy = Majority rule (win/lose) • EF = Mutual agreement (win/win) • Democracy = Lobbying to special interests • EF = Lobbying to customers (efficient)

  9. Unconstrained democracy is not the political system most complementary with economic freedom: Limited constitutional government is.

  10. Summary of economic freedom • Personal Choice • Voluntary exchange coordinated by markets • Freedom to enter and compete in markets • Protection of persons and property from aggression by others

  11. Report Composition • Sources – a report of reports • Objective (where possible) • External data (no author admissions) • Transparent (all sources and calculations quoted)

  12. Key Components • Area 1 – Size of Government • Area 2 – Legal System and Property Rights • Area 3 – Sound Money • Area 4 – Freedom To Trade Internationally • Area 5 – Regulation

  13. Size of Government

  14. Legal Institutions

  15. Sound Money

  16. Freedom to Trade with Foreigners

  17. Regulation

  18. Regulation … • Area 5C - Business Regulations • Area 5Ci - Administrative requirements • Area 5Cii - Bureaucracy costs • Area 5Ciii - Starting a business • Area 5Civ - Extra payments/Bribes/Favoritism • Area 5Cv - Licensing restrictions • Area 5Cvi - Cost of tax compliance

  19. Purpose of the Report Makes a contribution to the scholarly investigation of New Institutional Economics (ie. impact of economic, legal and political institutions on economic performance)

  20. Why is it important?

  21. Why is it important?

  22. Why is it important?

  23. Why is it important?

  24. Why is it important?

  25. Results!

  26. Top 10

  27. Bottom 10

  28. South Africa 85th

  29. South African Ranking (past 30 years)

  30. SA Success • Black Market Exchange Rates (1) • Ownership of Banks (1) • Interest Rate Controls (1) • Conscription (1) • Impartial Courts (18) • Freedom of foreigners to visit (19)

  31. SA Homework • Hiring and Firing (129) • Centralised collective bargaining (128) • Reliability of police (126) • Standard deviation of tariff rates (125) • General Government spending (117) • Private sector credit regulation (107)

  32. SA Changes in last 10 years • Money Growth (From 90th to 40th) • Foreign ownership restrictions (60th to 40th) • Capital controls (75th to 62nd) 7 Improvements

  33. SA Changes in last 10 years Hiring regulations/min wage (16th to 102nd) Government enterprises (20th to 90th) Collective Bargaining (60th to 128th) Hiring and Firing (68th to 129th) Standard deviation of tariffs (64th to 125th) 31 disappointments

  34. Major Countries

  35. What next? http://freetheworld.com

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