Brazilian States' Economic Freedom Index: Applying Fraser's Methodology for 2003–2016 Data

Abstract

The purpose of the paper is to apply Fraser’s methodology from the Economic Freedom of North America report to Brazilian data. government size, tax and labor market indicators vary among subnational entities. Following Friedrich A. Hayek’s tribute on the occasion the 70th birthday of Ludwig von Mises, the importance of an index for Brazilian States is to bring principles of liberalism—based on clear evidence—to public figures (Hayek 2012), particularly in a country dominated by interventionist ideas since the 1930s. Besides the academic challenge of obtaining and processing data in the same manner as the Economic Freedom of North America, the current turning point in politics and economics in Brazil demands this kind of applied research. The results suggest that the Brazilian states’ freedom scores are getting worse in recent years (2012–16), following the same trend as that of the national index. We argue for the idea that the increasing government interventions at the federal level have spread out to states and municipalities and have had the effect of institutionalizing and justifying decreases in freedom and greater influence of public entities on citizens’ everyday life. The final remarks point out improvement in institutional measures for the index, as an ongoing project as Milton Friedman stated on his foreword to Economic Freedom of the World: 1975–1995: to “bring the indexes of economic freedom up to date and to incorporate the additional understanding that will be generated.”