DEVELOPMENT-ECONOMIC FREEDOMS INTERACTION: A COMPARATIVE ANALYSIS OF D8 AND G8 COUNTRY GROUPS

Abstract

One viewpoint, which has been gaining traction recently, posits that augmenting economic freedom within liberal markets while minimizing public intervention spurs development. Conversely, another standpoint suggests that as development progresses, there emerges a heightened demand for greater economic freedom, resulting in the implementation of liberal policies. In this context the primary objective of this study is to scrutinize the presence of causality between economic freedom and development. Additionally, the study delves into whether this causal relationship, if extant, is consistent across countries at varying stages of development. Consequently, an examination is conducted on two distinct country groups, namely D8 and G8, employing the Dumitrescu-Hurlin panel causality test. This method dissects the directional link between economic freedom and development for these country clusters spanning the period 2000-2019. The analysis reveals that within D8 nations, a reciprocal causality exists between economic freedom and development. In contrast, among G8 countries, no causal link emerges from economic freedom to development, while a unilateral causal relationship emerges from development to economic freedom.