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Economic Freedom of the World - The Role of Government in the Modern Growth Economy

Economic Freedom of the World - The Role of Government in the Modern Growth Economy. Presentation to Institute X LOCATION DATE PRESENTER PRESENTING Institute. The crucial questions for economic management. What causes Economic Success?

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Economic Freedom of the World - The Role of Government in the Modern Growth Economy

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  1. Economic Freedom of the World - The Role of Government in the Modern Growth Economy • Presentation to • Institute X • LOCATION • DATE • PRESENTER • PRESENTING Institute

  2. The crucial questions for economic management • What causes Economic Success? • What are the practices of economically successful countries and regions? • How can countries and provinces achieve success and avoid failure • What are the implications of successful strategies?

  3. Why do some countries succeed and others fail?

  4. A Tale of Two Countries • Hong Kong and Venezuela • From poor to rich • From rich to poor

  5. Hong Kong and Venezuela…1950

  6. Hong Kong and Venezuela today

  7. Hong Kong and Venezuela compared

  8. Hong Kong and Venezuela population growth 1950 - present

  9. What differences caused Hong Kong to become Rich and Venezuela to become Poor? • Population - evidently not • Natural Resources - not likely • Ability to afford infrastructure - certainly not • Policy differences - a possible source of the difference

  10. The Attitude of Success…economic freedom in Hong Kong and Venezuela

  11. Hong Kong’s Freedom Advantage over Venezuela

  12. The story of Hong Kong and Venezuela is repeated around the globe • Motivated the creation of the Economic Freedom of the World Project to examine whether there were empirical regularities that could be found between economic freedom and other characteristics of societies including economic growth and development

  13. Economic Freedom of the World Project • 15 year project examining policies of successful and unsuccessful regions • Led by Professor Milton Friedman, Rose Friedman and Michael Walker • Involved 60 of the worlds top economists, four of whom received the Nobel Prize • Objective: find a way to measure economic freedom and explore the connection between it and other attributes

  14. What does Economic FreedomMean? • The right to pursue voluntary acts of trade and exchange without interference by government or others via force or fraud • The ability to access an impartial judiciary for the enforcement of property rights • The right of citizens to keep the majority of the income they earn

  15. What is the Index of Economic Freedom? • An attempt to identify the factors which make a country economically free • A compendium of 21 freedom factors based on objective data or independent surveys • A ranking of 123 countries according to the extent to which they are free • Now a collaboration of 55 Institutes in 55 different countries

  16. The Index measures 21 factors which are practical indicators of the extent to which consenting adults can engage in Capitalist Acts. It is the broadest, most objective measure of economic freedom ever constructed.

  17. The components of The Economic Freedom Index • Size of Government • Structure of the Economy • Monetary and Price Stability • Freedom to Use Alternative Currencies • Legal Structure and Property Rights • International Exchange • Freedom of Exchange in Capital Markets

  18. The Top Eleven

  19. The Next Ten

  20. How does Canada’s level of Economic Freedom compare with the ten most free countries and with NAFTA trading partners?

  21. World Average: Economic Freedom

  22. World Average: Economic Freedom, adjusted for population Countries with ranks in 1970

  23. World Average: Government Consumption as a Percentage of GDP

  24. World Average: Transfers as a percentage of GDP

  25. World Average: Publicly owned assets as a percentage of GDP

  26. World Average: Existence of Price Controls

  27. World Average: Right to own Foreign Currency

  28. World Average: Right to Own Private Property

  29. World Average: Tariff Rate

  30. World Average: Private Ownership of Banks

  31. World Average: Right to have Capital Transactions with Foreigners

  32. Population of the world, by economic freedom rating

  33. The top ten and how they got there

  34. Some Asian Countries

  35. Countries which have increased or decreased the level of Economic Freedom

  36. Countries having significant improvement since 1970

  37. Countries with significant deterioration since 1970

  38. The Race Toward Capitalism in the Eastern and Former Soviet Transitional Economies

  39. Why is Economic Freedom Important? • Economic rights are fundamental rights in the sense that without them there can be no political freedom or civil freedoms • They are a prerequisite for growth and development • They are a prerequisite for broader human development

  40. Least Free…………...Most Free

  41. Least Free…………...Most Free

  42. Growth of Real Per Capita Output in the 1990s of Countries That Improved the Most Since 1980.

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