0132 --
The commenters are right: the reasons are many. But there's at least
one excellent study that has measured a number of factors and
influenced further research.
Even Milton Friedman, the Nobel Prize-winning economist, has changed
his opinion on the issue. In the wake of the collapse of Communism,
Friedman had three words for countries making the transition:
privatize, privatize, privatize. "But I was wrong," he said in 2001,
saying that at its extreme privatization is theft. "It turns out that
the rule of law is probably more basic than privatization.
Privatization is meaningless if you don't have the rule of law."
Wall Street Journal Editorial Page
"Mideast Peace? Let's Start With The Rule of Law," (Pollock, Nov. 30, 2002)
http://www.opinionjournal.com/extra/?id=110002691
ECONOMIC FREEDOM OF THE WORLD
==================================
Three college professors are the authors of a study called "Economic
Freedom of the World." The first study was done by James Gwartney,
Robert Lawson and Walter Block with support from the Fraser Institute
of Canada in 1996. The original report used four types of measures:
1. monetary measures:
? money supply expansion
? standard deviation of inflation
? freedom to own foreign currency
? freedom to make deposits abroad
2. government consumption.
? general government spending as a share of GDP
? government-owned business as a share of the economy
? price controls
? freedom to compete in markets
? equality under the law
? government policies causing negative interest rates
3. Taxation and confiscation
? transfer payments and subsidies as a percentage of GDP
? top marginal tax rate
? use of conscription for military
4. Restrictions on foreign exchange
? taxes on trade as a percentage of trade
? difference between official and black market exchange rate
? size of trade vs. domestic industry
? restrictions on foreign currency exchange
The report is now in its 8th annual edition, with the most-recent 2004
edition just being released on July 15, 2004:
The Fraser Institute
"Economic freedom found to be a powerful magnet for investment
according to new study," (July 15, 2004)
http://www.freetheworld.com/press071504int.html
The authors have changed for this most-recent version of the report,
with Gus A. Stavros, of Florida State University, having replaced
Walter Block. They've changed the categories slight, with a specific
group of 5 measures being used for "legal structure and security of
property."
They note substantial progress in economic freedom in most countries
(including Botswana, Chile, India, Ireland, New Zealand, the U.K.,
Estonia and Uganda). At the same time there were declines in
Argentina, Indonesia, Malaysia, Venezuela and Zimbabwe. Gwartney &
Lawson's discussion of the most-recent report is here:
Fraser Institute
"Cato Institute News Conference," (July 15, 2004)
http://www.freetheworld.com/2004/cato2004.ppt
The full report is here:
"Economic Freedom of the World, 2004"
http://www.freetheworld.com/release.html
The authors argue that GDP is determined by "the cornerstones of
economimc freedom: personal choice, voluntary exchange, freedom to
compete and security of privately-owned property."
However, you may want to look at the countries with declines in
economic freedom to determine what drives GDP the most. Some of the
countries, such as Malaysia, have long had prosperous economies and
all of the other four have substantial natural resources.
Google search strategy:
"Economic Freedom of the World" + Fraser Institute
"Milton Friedman" + "rule of law"
Best regards,
Omnivorous-GA |
