Economic Freedom Research Articles

Women's property rights equality and entrepreneurial activity

AbstractEntrepreneurship is shaped by institutions. However, past research has largely assumed that everyone has equal property rights even though women often operate under a different property rights structure and have fewer legal rights than men. We fill a gap in the literature by examining how the property rights of women impacts female entrepreneurship in a panel countries using data on property rights from the Economic Freedom of the World dataset and data on entrepreneurship from the Global Entrepreneurship Monitor. We find that better protection of property rights for women is associated with more the female entrepreneurship relative to male entrepreneurship.

Increasing support for economic freedom: responses in a representative sample of US adults

AbstractThe relationship between economic freedom and improvements in social and economic outcomes is well-documented. Yet, increasing support for government control of voluntary exchange has arisen in the US and many other countries. The present study analyzed whether videos describing human flourishing would influence support for economic freedom. In Study 1, a ‘‘brain as predictor’’ approach measured the neurologic responses of participants (N = 64) to a library of videos in order identify the videos most likely to influence people's attitudes. Study 2 then sent two videos to a representative sample of US adults (N = 1212) and assessed support for economic freedom compared to a no-video control group. The analysis first identified demographic categories that had statistically low support for economic freedom (Californians, those with low incomes, Democrats, young adults, individuals without a college education, people receiving substantial government support, and women) as targets for influence. Two different videos increased support for economic freedom between 5 and 10% among Californians and among those receiving government aid. A feature importance analysis was used to rank the demographic factors affecting support for economic freedom, identifying those receiving government aid as the group for whom future messaging would have the largest impact.

Is natural resource wealth a boon or a bane? The impact of oil rents and foreign direct investment on economic growth in Kazakhstan

The nexus between foreign direct investment, natural resource endowment, and their impact on sustained economic growth, is contentious. This study investigates the resource curse hypothesis and the effects of FDI on economic growth in Kazakhstan. The study covers the period from 1990 to 2022 and employs the Autoregressive Distributed Lag (ARDL) model and Toda-Yamamoto causality methods. The Bounds cointegration results reveal the existence of long-term equilibria between per capita GDP and the predictors. The findings reveal a significant impact of oil rents on economic growth, contradicting the resource curse hypothesis and suggesting a resource boon instead. In stark contrast, the impact of FDI on Kazakhstan’s economic growth is found to be insignificant, despite the presence of a causal nexus. Furthermore, economic freedom and export diversification have a positive significant impact on economic growth, while inflation exhibits a negative but significant impact. Although governance has a direct impact on GDP per capita, it is deemed insignificant, as the negative average governance index implies poor governance. Expectedly, the result establishes a causal effect between export diversification, economic freedom, governance, oil rents, and economic growth. This underscores the fundamental role played by the interplay of diversification, economic freedom, governance, and oil rents in fostering sustainable economic growth. In addition, economic freedom stimulates gross fixed capital formation, indicating that it enhances domestic investment. Notably, the findings refute the crowding-out effect of FDI on domestic investment in Kazakhstan. Consequently, to escape the resource curse and the Dutch disease syndrome, the study advocates for enhancing good governance capabilities in Kazakhstan. Thus, we recommend that good governance could reconcile the twin goals of economic diversification and deriving benefits from oil resources, ultimately transforming oil wealth into a boon in Kazakhstan.

Determinants of receiving government support by small and medium-sized enterprises in Russia

Government support measures help companies overcome various restrictions impeding their growth and develop ment, which is of special relevance for small and medium-sized enterprises (SMEs). These measures, therefore, must reach the target companies and ensure efficient allocation of resources. The article reveals key characteristics of SMEs in Russia that increase the probability of them receiving government support. The research methodology is based on public interest theory, public choice theory and the concept of economic freedom. The research method is a two-step regression analysis, in which the binary choice model is first evaluated, and then the LASSO model is used to assess the impact of the textual content of the companies’ websites. The dataset of the study is represented by data on 2,176 Russian metallurgical enterprises for 2020–2023, of which 57% were receiving government support. The results of the first step of evaluation showed that the organization’s age and size meas ured by revenue were the key factors associated with the probability of receiving government support. At the second step, we found that the mention of certain goods or materials on the websites, the enterprise’s location and orientation towards foreign stakeholders were significantly related to the likelihood of getting state support. The study offers tools for analyzing the determi nants of government support for SMEs and highlights the importance of this analysis for more efficient allocation of government resources.

Free-market institutions and income inequality: Did the link persist around the world even in times of falling within-country inequality, 2000–2021?

High or rising economic inequality can exacerbate political inequalities and is plausibly linked with some social harms, such as health problems and declines in happiness and trust. Within-country income inequality increased sharply across most of the world since the 1980s. One prominent critical sociological account of this occurrence points toward institutions of free-market capitalism, or “neoliberalism,” as a key cause that unleashed inequality during the globalization age. This article empirically operationalizes free-market institutions with the use of Fraser Institute’s index of economic freedom and examines the issue with fixed-effects regressions in a novel dataset of 130 countries between the years 2000 and 2021. It finds a substantial positive correlation between the two variables in the developing, though not the developed, world. This finding is robust to a variety of alternative specifications. Moreover, across specifications, modest size of government and freedom of international trade stand out as the two clear components of economic freedom driving the aggregate relationship. Finally, mediation analysis suggests there also exists an indirect ameliorative relationship between economic freedom and inequality through the conduit of economic development.

The fertility gap and economic freedom

AbstractThe difference between desired fertility and achieved fertility is called the fertility gap. This paper investigates the relationship between economic freedom and the fertility gap across the United States since greater economic freedom may empower individuals to choose work more compatible with their family goals. We test this hypothesis using individual measures of fertility preferences from a nationally representative survey of reproductive‐aged women (2020–2024) and find evidence that women are more likely to achieve their family goals in states with greater economic freedom. This effect is strongest when focusing on variation in labor market freedom.

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

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.

Perceived corruption, economic freedom, and firms in India

Abstract Research has shown that the relationship between economic freedom and corruption is rather complex. While some studies suggest a negative relationship, others show the matter to be more nuanced. While more regulations are known to foster corrupt institutions, a competitive market can also incentivize bribery and corruption. Our study examines the role of economic freedom as it relates to perceived corruption, measured via a survey for India. Using firm-level data, we explore the relationship between perceived corruption in the formal sector and economic freedom across Indian states. In our baseline results for Indian firms, we find a significantly negative relationship between perceived corruption and lagged economic freedom. These results hold when we design matching models and include a number of potentially confounding factors to control for identification issues. Additionally, we show that small and young firms and those with sole ownership perceive greater benefits from higher economic freedom. In contrast, older firms perceive higher corruption when economic freedom is higher. This lends support to the idea that competition facilitated by economic freedom can increase rent seeking behavior. Our study contributes to the literature by emphasizing that the relationship between economic freedom and corruption in India is layered, with firm characteristics playing a crucial role.

Economic freedom and legal gender disparity

AbstractUsing a panel dataset from 1970 to 2019, this paper theorizes and empirically demonstrates that countries with higher levels of economic freedom have fewer legal differences between men's and women's economics rights. Specifically, economic freedom promotes equal legal treatment of women to work, get paid, and be entrepreneurs. This finding is robust to controlling for income, political institutional quality, and country and period fixed effects. Furthermore, economic freedom's impact is amplified in democratic countries. The results challenge the prevailing notion that capitalism is detrimental to women, instead providing evidence that economically free countries favor less legal discrimination against women.

The causal effect of economic freedom on female employment & education

AbstractWhile there are decades of evidence that economically free economies grow faster and are more productive than less free ones, there is less knowledge about the effect of economic freedom on groups that have traditionally been disadvantaged. I study the causal effects of large and sustained jumps in economic freedom on women's labor force participation and primary school enrollment. I find that these jumps have a positive and statistically significant effect in both cases–economic freedom is good for women's labor force opportunities and female education.

The role of economic freedom in the development of international tourism in Asian countries

Purpose ― This paper aims to investigate the influence of economic freedom and its components, namely business freedom and trade freedom, on international tourist arrivals in Asian countries. Additionally, it examines the effect of important macroeconomic factors, such as foreign direct investment, exchange rates, political stability, GDP per capita, and inflation on international tourist arrivals in Asian countries.Methods ― The GMM two-step estimation system is used to analyze data from 25 Asian countries from 1995 to 2020.Findings ― The results show that economic and trade freedom positively influence tourism, while business freedom has a less distinct impact. Inflation positively contributes to tourist arrivals. Exchange rates and political stability show inconclusive effects.Implications ― The study recommends that governments prioritize expanding economic freedom to boost international tourism.Originality ― This is the first study on the impact of economic freedom on developing international tourism in Asian countries.

Exploring the role of governance in determining public-private investment in energy: New empirical insights from ASEAN

The energy sector plays a pivotal role in driving economic growth and enhancing social welfare. However, the mobilization of sufficient investment including public and private remains crucial for advancing energy infrastructure development. Against this backdrop, this study aims to explore the role of governance in determining public-private investment in energy (PPE). The empirical analysis leverages a comprehensive dataset spanning 25 years from 1998 to 2022 and covering ASEAN nations. The study employs the CS-ARDL (cross-sectionally augmented autoregressive distributed lag) model for regression analysis to assess governance dimensions' long-term and short-term effects on PPE. Additionally, the study conducts robustness analysis by using the FMOLS (fully modified ordinary least square) model and an alternative proxy of governance i.e. EFI (economic freedom index) to validate the findings. The analysis reveals that governance exerts a significant and positive effect on PPE. Specifically, the dimensions of governance such as corruption control (COC), government effectiveness, political stability (POS), regulatory quality, etc. demonstrate robust positive associations with PPE. This positive relationship indicates that stronger governance institutions foster transparency, efficiency, and stability in the energy sector, attracting private-sector investments. The findings of this study have significant policy implications for policymakers, investors, and stakeholders seeking to promote sustainable energy transitions and socio-economic development within the ASEAN region. Specifically, it is essential to strengthen governance institutions, enhance regulatory frameworks, and foster public-private partnerships for energy investment. This study contributes to the existing literature by providing novel insights into the governance-energy investment nexus within the ASEAN region.

Economic Freedom, Budget Deficits, and Perceived Risk from Larger National Debt-to-GDP Ratios: An Exploratory Analysis of Their Real Interest Rate Effects

Economic Freedom, Budget Deficits, and Perceived Risk from Larger National Debt-to-GDP Ratios: An Exploratory Analysis of Their Real Interest Rate Effects

The Impact of Administrative Decisions on Commercial Freedom in Saudi Arabia: A Legal Study

This legal study examines the impact of administrative decisions on commercial freedom in Saudi Arabia, exploring the intricate relationship between regulatory frameworks and business operations. The research analyzes the historical context of commercial freedom in the kingdom, tracing its evolution from traditional practices to the current legal landscape. It delves into the constitutional provisions and relevant legislation that shape administrative decision-making processes affecting commercial activities. Through case studies, the study illustrates practical implications of administrative decisions on various aspects of business operations, including visa regulations, residence permits, zoning laws, and regulatory compliance. The research identifies key challenges to commercial freedom, such as regulatory barriers and administrative obstacles, while also highlighting opportunities for enhancement, including improved transparency and modernized regulations. The study emphasizes the crucial roles of key stakeholders - government, private enterprises, and civil society organizations - in shaping commercial freedom. It proposes recommendations for reform, focusing on legislative changes, institutional improvements, and fostering an entrepreneurial culture. While acknowledging Saudi Arabia's progress in developing its commercial legislation and regulatory system, the research identifies areas for improvement. It concludes that the kingdom's efforts to balance regulatory oversight with business needs, coupled with its economic diversification goals, suggest a positive trajectory for commercial freedom. However, success depends on continued reform, stakeholder engagement, and adaptation to global economic trends while respecting local cultural and religious values. This study provides valuable insights for policymakers, business leaders, and researchers interested in understanding and enhancing commercial freedom in Saudi Arabia.

Julius Malema, from Masupatsela to the Formation of the Economic Freedom Fighters (EFF): Historical Narrative

Julius Malema was born in 1982 during the apartheid era in South Africa and began his political journey at an early age. As he rose in the political space, he became prominent, playing a critical role in reviving the African National Congress Youth League (ANCYL). He was exposed to formal politics from the age of nine when he joined Masupatsela (Trailblazers), the youth brigade of the African National Congress (ANC) at the time. He rose to positions of power through joining the ranks of the Congress of South African Students (COSAS), the ANCYL, and post his expulsion from the ANCYL, established his own organisation, the Economic Freedom Fighters (EFF), of which he is the current president, also known as the commander in chief (CiC). The article interrogates Malema's role in South African politics, and how he contributed to growing factionalism in the ANC. First, the article discusses Malema's early stages of joining politics, and his gradual growth, until he became the president of the ANCYL in 2008. Second, the article discusses his role in the politics of the mother body, the ANC, that is, in policies. Third, the article scrutinise why Malema was expelled from the ANCYL and, last, the emergence of the EFF in 2013 and its radical stance in the politics of South Africa.

Societal Impact of the Tennessee Small Business Administration: Lowered Barriers to Entry, State Growth, and Economic Freedom

This paper focuses on the effects of SBA lending and its possible effects on the economic growth in Tennessee. After all, claims about the belief that small business is the driving force behind job creation and economic growth are found throughout political speeches, newspaper columns, and public policy forums. These claims are frequently presented as justification for tax incentives, regulatory policies, and other government programs that favor small business by removing barriers to entry. Access to capital is often the biggest obstacle for an entrepreneur. This research focused on the relationship between guaranteed loans from the SBA and the economic growth of Tennessee. This research found a positive relationship between the SBA 7A lending and state growth in Tennessee. Thus, providing policymakers evidence that pursuing policies which support economic freedom will continue to support Tennessee’s state growth.

Measuring Size and Causes of Shadow Economy in Ethiopia

The paper estimates the size of the Shadow Economy (SE) in Ethiopia from 1995 to 2022 and rigorously tests the statistical relationships between the SE and various causal variables. In order to carry out the comprehensive econometric analysis, a multiple indicator multiple causes (MIMIC) model was effectively applied. The main causes of the Ethiopian SE are carefully analyzed, and several economic policies aimed at reducing it are thoughtfully suggested. An appraisal of the reliability of these estimates is conducted, along with an alternative benchmark strategy for the MIMIC approach that was proposed for enhanced accuracy. The findings reveal that the causal variables, including tax burden, inflation rate, trade openness, and economic freedom, significantly influence the shadow economy. Furthermore, it shows that indicator variables, such as currency in circulation and official economic growth rates, significantly indicate the presence and extent of a shadow economy. Thus, based on the insightful findings of the research, the author recommends that the government increase trade relations with the rest of the world and promote greater economic freedom. It also endorses adjusting inflation and tax burdens to effectively minimize the shadow economy in Ethiopia.

Data policy restrictions and cross-border E-commerce: Evidence from China

In the era of digital economics, data has become a crucial factor in driving cross-border e-commerce (CBEC). We examine the impact of data policy restrictions on CBEC, focusing on the Chinese context. Using a theoretical framework that analyzes the costs and benefits of data protection regulations, we delve into the economic effects of these policies. The results show that data policies in importing countries have a substantial negative impact on China’s CBEC exports. The heterogeneous analysis shows that this negative impact is stronger for products that are more differentiated, industries that are more highly-digital and high-tech, and countries with higher income. We also estimate the moderating role of data comparative advantage. The results reveal that the trade-inhibiting effect of data restriction increases with the enhancement of importing countries’ data comparative advantage. Finally, economic freedom in the importing country can mitigate the negative impact of data policy restrictions.

МІЖНАРОДНЕ ІНВЕСТИЦІЙНЕ СПІВРОБІТНИЦТВО ТА ЙОГО РОЛЬ У ПОВОЄННОМУ ВІДНОВЛЕННІ ПРИМОРСЬКИХ ТЕРИТОРІЙ УКРАЇНИ

The article is devoted to the study of the scientific and theoretical foundations of international investment cooperation and the analysis of its impact on the economic development of the coastal areas of Ukraine. It is conducted the critical review of existing definitions of the studied concept. It is proposed the proper definition that considers the socio-economic nature of such cooperation. International investment cooperation should be understood as economic relations formed as a result of international investment and mediating the movement of international investments. It is defined the main purpose of the investigated phenomenon, which consists in making a profit. It is emphasized the key difference between international investment cooperation and other forms of cross-border movement of capital by the presence of a commercial basis that accompanies this process in one way or another. It is considered previous developments in formulating the principles of investment cooperation. It is proposed own list of principles for its implementation: economic expediency, freedom and equality of parties, fair distribution of benefits and risks, regulatory and tax coordination, social, environmental and ethical responsibility, strategic, transparent and contractual nature. By constructing polynomial regression equations of the dependence of the gross product of the coastal regions of Ukraine on direct foreign investment, the regularities of the influence of international investment cooperation on the economic development of the respective territories are investigated. It is determined that such cooperation is characterized by its fundamental importance for the economic growth, its direct impact on the regional economic complex, the marginal possibilities of rational placement of international investments and the unevenness of the positive effect they generate. It is substantiated the practical advantages and limitations of the potential increase in the volume of international investment in the post-war period.

THE EFFECT OF THE SHADOW ECONOMY AND ECONOMIC FREEDOM ON ENTREPRENEURSHIP: AN EMPIRICAL STUDY IN ASIAN COUNTRIES

This study examines the effect of the shadow economy, economic freedom and other macroeconomic factors on formal entrepreneurship in Asian countries. The dataset encompasses 28 countries over the period from 1995 to 2018. The Fixed Effect Model (FEM) and Generalized Least Squares (GLS) methodologies are employed for regression analysis. The results indicate a nonlinear relationship between the shadow economy and formal entrepreneurship. Economic freedom, particularly trade freedom, significantly enhances entrepreneurship. Positive macroeconomic influences on formal entrepreneurship include financial development, political stability, GDP per capita growth and foreign direct investment net inflows, while government spending and unemployment negatively affect entrepreneurship. The findings suggest that a substantial shadow economy does not inherently impede formal entrepreneurship. Consequently, governments should prudently consider the role of the shadow economy in fostering entrepreneurial growth. Moreover, policies aimed at improving economic freedom, especially trade freedom, can create a conducive environment for boosting formal entrepreneurship.