Economic Freedom of the World

What difference does living in a country with economic freedom make for the average person compared to living in an economically unfree country? Well, let's start with twenty years greater life expectancy and then add higher income, lower unemployment, greater literacy, greater political freedom, higher economic growth, lower infant mortality, less corruption, better environmental quality, etc.

In an annual report titled Economic Freedom of the World from the Cato Institute, co-authored by James Gwartney (author of our textbook for MGT 551), 130 countries were evaluated for economic freedom on an index scale from 1 (economicall unfree) to 10 (economically free). Economic freedom is then compared to various economic, health, political freedom variables.

• Nations in the top quartile of economic freedom have an average per-capita GDP of $24,402, compared to US$2,998 for those nations in the bottom quartile.
• The top quartile has an average per-capita economic growth rate of 2.1%, compared to minus 0.2% for the bottom quartile.
• Unemployment in the top quartile averages 5.9%, compared to 12.7% in the bottom quartile.
• Life expectancy is 77.8 years in the top quartile compared to 55.0 years in the bottom quartile.
• In nations of the top quartile, only 0.3% of children are in the labor force, compared to 19.3% in the least economically free nations.
• In nations of the top quartile, the average income of the poorest 10% of the population is $6,519, compared to $826 for those in the bottom quartile.
• Nations in the top quartile of economic freedom, have an average score of 1.8 for political rights on a scale of 1 to 7, where 1 marks the highest level of freedom and 7, the lowest level. The bottom quartile has an average score of 4.6.