1 Economic Freedom of the World: 2002 Annual Report n Presentation to n Fraser Institute Press Conference n Calgary n June 24, 2002 n Fred McMahon and Michael Walker n The Fraser Institute

2 THANK YOU FOR COMING! n The key to changing policy in the world is changing the climate of opinion about what works and what does not work in encouraging world development n The key to changing the climate of opinion is providing the widest possible audience with good information about the causes of development and under-development

3 Economic Freedom of the World Project n Objective: find a way to measure economic freedom and explore the connection between it and other variables n 17 year project n Led by Professor Milton Friedman, Rose Friedman and Michael Walker n Involved 60 of the worlds top economists and political scientists

4 What is The Economic Freedom of the World Index? u An annual compilation of data representing factors which make a country economically free u Authors: James Gwartney and Robert Lawson u A compendium of 36 government policies affecting economic freedom based on objective data or independent surveys u A ranking of 123 countries representing 91% of the worlds population according to the extent to which they permit their citizens to be economically free u Now a collaboration of 55 Institutes in 55 different countries

5 Introducing the 2002 Economic Freedom of the World Index Results

6 The top ten and how they got there

7 Countries with significant deterioration since 1970

8 Economic Freedom in Africa

9 More African Countries

10 Economic Freedom on the march.

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

12 The impact on economic growth and development

13 Income (per person) of the Bottom Ten

14 Per Capita Income and Economic Freedom Quintile Least Free …….. Most Free

15 Growth in Real GDP Per Capita and Economic Freedom QuintileLeast Free ……………..….. Most Free

16 Per Capita Income of poorest 10% and Economic FreedomLeast Free …….. Most Free

17 The impact on human development n The United Nations Development Index

18 Economic Freedom and Human Development

19 Life Expectancy at Birth, 1999, and Economic Freedom QuintilesLeast Free ……………. Most Free

,Adult Illiteracy rate, (% of population age 15 and above) by Economic Freedom Quintile Least Free ……….... Most Free

21 Human Poverty Index and Economic Freedom Quintile Least Free …………..…. Most Free

22 Infant Mortality and Economic Freedom Quintile Least Free ………..…. Most Free

23 Child Malnutrition and Economic Freedom Quintile Least Free ……………..Most Free

24 Economic Freedom and Child Labor (proportion of children 5-14 years of age working, 2000)Least Free ……………. Most Free

25 Access to Essential Drugs, 1999, and Economic Freedom Quintiles Least Free …………..Most Free

26 % of Population Using Improved Water Sources, 1999Least Free …………….. Most Free

27 Economic Freedom Versus Corruption Least Free ………….. Most Free

28 Political Stability and Economic Freedom Quintile Least Free ………..… Most Free

29 Political Rights & Civil LibertiesLeast Free …… Most Free

30 Focus on Mauritius

31 Focus on Botswana

32 In Africa, Botswana and South Africa score the best.

33 How important is it to have a sound legal structure with security of property rights and rule of law? n Our analysis indicates that a legal structure that provides for evenhanded enforcement of contracts and security of property rights is vitally important. When it is absent, gains from trade will go unrealized and both entrepreneurship and investment will flow elsewhere. n A comparison between the highest 20 and lowest 20 countries in the legal area illustrates this point. The average per capita GDP of the 20 highest rated countries in the legal area was $26,367 compared to an average of $2,629 for the 20 lowest rated countries. Similarly, the growth rate in the 1990s of the top 20 was 2.26% per year compared to -0.26% per year among the bottom 20.

34 Legal structure ratings and economic performance. Top 20 CountriesBottom 20 Countries

35 The End……phew!