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Economic Freedom of the World

Explore the concept of economic freedom, its key components, global rankings, and its impact on countries' development and prosperity. Learn from renowned economists like Milton Friedman and James Gwartney.

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Economic Freedom of the World

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  1. Economic Freedom of the World Ryan H. MurphySouthern Methodist UniversityOctober 2nd, 2019 Oak Cliff Lions Club Weekly Club Luncheon

  2. What do we mean by economic freedom? “The cornerstones of economic freedom are personal choice, voluntary exchange, open markets, and clearly defined and enforced property rights. Individuals are economically free when they are permitted to choose for themselves and engage in voluntary transactions as long as they do not harm the person or property of others. When economic freedom is present, the choices of individuals will decide what and how good and services are produced.”

  3. Ranking the Countries,* 2017 Data 1. Hong Kong 2. Singapore 3. New Zealand 4. Switzerland 5. United States 6. Ireland 7. United Kingdom 8. Canada T155. Egypt T155. Syria 157. Congo, Dem. Rep. 158. Angola 159. Algeria 160. Sudan 161. Libya 162. Venezuela *Not including countries where insufficient data are available, including Cuba and North Korea

  4. Basic Information • Project originated with a series of conferences in the late 1980s attended by Nobel Laureates such as Milton Friedman and Douglass North. • Data available on five year intervals from 1970-2000, and yearly from 2000-present. • All data are transformed to a zero-to-ten scale, where ten always corresponds to more economic freedom. • 162 countries are available in the most recent year. • Data originates with third party sources – we rely on the judgments of reputable third parties (like the World Bank), not our own.

  5. Putting the philosophical definition into action • [Limited] Size of Government • The Quality of the Legal System and Property Rights • Sound Money • Freedom to Trade Internationally • [Limited] Regulation

  6. What we are not measuring • “Overall” freedom, inclusive of personal freedoms and political liberties. • A “good country” index • Everything that is important in life

  7. Ten Things We Have Learned from the EFW Project (from James Gwartney, “Institutions, Economic Freedom, and Cross-Country Differences in Performance, SEJ 2009) • Private Investment as a Share of Gross Domestic Product is Higher in Countries with More Economic Freedom than in Those That Are Less Free. • The Productivity of Private Investment Is Higher in Countries with More Economic Freedom • Countries with More Economic Freedom Grow More Rapidly than Those That Are Less Free

  8. Ten Things We Have Learned from the EFW Project (from James Gwartney, “Institutions, Economic Freedom, and Cross-Country Differences in Performance, SEJ 2009) • Countries with More Economic Freedom Achieve Higher Levels of Per Capita Income than Those That Are Less Free • Government Spending as a Share of the Economy is Not a Very Good Measure of Economic Freedom or Reliance on Markets • A Legal System that Protects Property Rights and Enforces Contracts in an Even-Handed Manner is Vitally Important for the Achievement of a High Level of Per Capita Income • Economies That Are More Open Tend to Have Higher Rates of Private Investment

  9. Ten Things We Have Learned from the EFW Project (from James Gwartney, “Institutions, Economic Freedom, and Cross-Country Differences in Performance, SEJ 2009) • Heavy Regulation Leads to Political Corruption • Movements Toward Institutions and Policies More Consistent with Economic Freedom Are Associated with Larger Reductions in Poverty • Poor Legal Structure, Trade Barriers, and Regulation of Business Are Major Factors Contributing to the Poor Performance and Poverty of Sub-Saharan African Countries

  10. Other Freedom Projects • Human Freedom Index • Economic Freedom of North America • Metropolitan Economic Freedom Index

  11. Human Freedom, 2016 1. New Zealand 2. Switzerland 3. Hong Kong 4. Australia 5. Canada T6. Netherlands T6. Denmark (U.S. is 17th) 155. Algeria 157. Sudan 158. Libya 159. Iraq 160. Yemen 161. Venezuela 162. Syria

  12. Florida • New Hampshire • Texas • Tennessee • South Dakota (….) • Alaska • California • West Virginia • Kentucky • New York

  13. Metropolitan Economic Freedom Rankings, 52 Larges MSAs 1. Houston-The Woodlands-Sugarland, TX 2. Jacksonville, FL 3. Tampa-St. Petersburg-Clearwater, FL 4. Richmond, VA 5. Dallas-Fort Worth-Arlington, TX 48. Cleveland-Elyria, OH 49. New York-Newark-Jersey City, NY/NJ/PA 50. Buffalo-Cheektowaga-Niagra Falls, NY 51. Rochester, NY 52. Riverside-San Bernadino-Ontario, CA

  14. Learn More • freeTheWorld.com • bit.ly/oneilcenterevents • @SMUOneilCenter • RyanHMurphy.com

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