(DOWNLOAD) "Economic Freedom and Development: New Calculations and Interpretations." by The Cato Journal # eBook PDF Kindle ePub Free
eBook details
- Title: Economic Freedom and Development: New Calculations and Interpretations.
- Author : The Cato Journal
- Release Date : January 22, 2006
- Genre: Politics & Current Events,Books,
- Pages : * pages
- Size : 258 KB
Description
For some time there has been a debate about the effect of economic freedom on economic growth and development (Beach and Davis 1999: 10; de Haan and Siermann 1998; de Haan and Sturm 2000; Edwards 1998; Goldsmith 1997; Gwartney, Lawson, and Block 1996: 109; Knack and Keefer 1995; Pitlik 2002; Scully 1992; Torstensson 1994; Weede and Kampf 2002). Although there is wide agreement about the stylized fact that economically free societies are richer than other societies, there is less agreement about the impact of economic freedom on growth rates. Some writers contend that the level of economic freedom affects growth, whereas others, in particular de Haan and his associates, dispute the robustness of this claim and find only a relationship between improvements in economic freedom and growth. The most recently published research on the effects of economic freedom on growth (Gwartney and Lawson 2004; Gwartney, Holcombe, and Lawson 2006) reaffirms that there are strong and beneficial effects of the level of economic freedom and of its improvement on growth rates. Looking at the published literature as well as at the work in progress by one of my doctoral students (Liu 2007), my impression is that there are two ways to strengthen the effects of the level of economic freedom on growth: first, choose a longer rather than shorter period of growth observation; second, and more important, use an average measure of the level of economic freedom rather than a single time point measure of economic freedom that refers only to the first year of growth observation. If one compares, say, de Haan and Sturm's (2000) study with Gwartney, Holcombe, and Lawson's (2006), then one finds that the former study uses a somewhat shorter period of growth observation, but both of them use the level of economic freedom at the beginning of the growth period to be explained. (1) Whereas de Haan and Sturm (2000) find no significant and robust effect of the level of economic freedom on growth, Gwartney, Holcombe, and Lawson (2006) arrive at the opposite conclusion: The level of economic freedom does promote growth. (2)