Transcript Economic Freedom of the World: Annual Report 2004

Economic Freedom of the
World: 2007 Annual Report
Oman’s Achievement

International Research
Foundation
Press Conference

Muscat, Oman
September 4, 2007

Fred McMahon, Director,
Globalization Studies,
The Fraser Institute
Canada
1
THANK YOU FOR
COMING!

The key to changing the world is changing
the climate of opinion about what works
and what does not work in creating
prosperity and other positive outcomes
 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
2
It is a pleasure and an honour
to be here
I would like to thank Salem Al Ismaily,
Executive President of the Omani Center for
Investment Promotion and Export Development,
and Azzan Al Busaidi, CEO of the
International Research Foundation of Oman,
for inviting me and congratulate both on the
great work they are doing for Oman and
worldwide in providing the best possible
information here and internationally.
3
What is Economic Freedom
Individuals have economic freedom when
property they acquire without the use of force,
fraud, or theft is protected from physical invasions
by others and they are free to use, exchange, or
give their property as long as their actions do not
violate the identical rights of others. An index of
economic freedom should measure the extent to
which rightly acquired property is protected and
individuals are engaged in voluntary transactions.
James Gwartney et al. 1996
4
Why is economic freedom
important

People are the best positioned to make
choices for themselves and their family.
 With voluntary economic agreements,
everyone gains.
 This dynamic spreads through the economy
and generates prosperity and hope
 A quick peak at the top and bottom 10.
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Income (per person) of the Top 10
United States
Ireland
Switzerland
Hong Kong
Canada
United Kingdom
Australia
Singapore
New Zealand
Estonia
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
GDP per Capita, 2005 (ppp)
Sources: The Fraser Institute; The World Bank, World Development Indicators
CD-ROM, 2007.
6
Income (per person) of the
Bottom Ten
Venezuela
Angola
Zimbabwe
Togo
Chad
Congo, Rep. Of
Central Afr. Rep.
Niger
Congo, Dem. R.
Burundi
0
10,000
20,000
30,000
40,000
50,000
60,000
GDP per Capita, 2005 (ppp)
Sources: The Fraser Institute; The World Bank, World Development Indicators
CD-ROM, 2007.
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Economic Freedom of the World Project

Objective: find a way to measure economic
freedom and explore the connection
between it and other variables
 20 year project
 Led by the late Milton Friedman, Rose
Friedman and Michael Walker
 Involved 60 of the world’s top scholars
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The Economic Freedom of
the World Index
 An
annual compilation of data representing factors
which make a country economically free
 Authors: James Gwartney and Robert Lawson
 A compendium of 42 variables affecting economic
freedom based on objective data or independent
surveys
 A ranking of 141 countries representing 95% of the
world’s population according to the extent to which
they permit their citizens to be economically free
 Now a collaboration of Institutes in 71 different
countries
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How is Economic Freedom Measured
And what the measurements mean

Size of government and taxation
 Private property and the rule of law
 Soundness of Money
 Trade regulation and tariffs
 Regulation of business, labour and capital
markets
10
Talk about making a difference …
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Member Institutes of Economic Freedom of the World
Albanian Center for Economic
Network
Research, Albania
Fundación Libertad, Argentina
Institute of Public Affairs, Australia
TIGRA®, Austria
Center for Economic and Political
Research, Azerbaijan
The Nassau Institute, Bahamas
Making Our Economy Right (MOER),
Bangladesh
Scientific Research Mises Center,
Belarus
Centre for the New Europe, Belgium
Fundacion Libertad y Democracia
(FULIDE), Bolivia
Instituto Liberal do Rio de Janeiro,
Brazil
Institute for Market Economics,
Bulgaria
Cambodia Institute of Development
Study, Cambodia
The Fraser Institute, Canada
Instituto Libertad y Desarrollo, Chile
ILP- Instituto Libertad y Progreso,
Colombia
Instituto para la Libertad y el
Análisis de Políticas, Costa Rica
The Institute of Economics, Croatia
Liberální Institut, Czech Republic
Center for Politiske Studier (CEPOS),
Denmark
Fundación Economía y Desarrollo
Inc., Dominican Republic
Instituto Ecuatoriano de Economía
Política, Ecuador
International University Concordia
Audentes, Audentes University,
Estonia
Association pour la Liberté
Economique et le Progrès Social
(ALEPS), France
Society for Disseminating Economic
Knowledge:“New Economic School –
Georgia”, Georgia
Liberales Institut, Germany
The Institute of Economic Affairs, Ghana
Centro de Investigaciones Económicas
Nacionales, Guatemala
Institut de Recherche pour la Liberte
Economique et la Prosperite (IRLEP), Haiti
Hong Kong Centre for Economic Research,
Hong Kong
Szazadveg Foundation, Hungary
Centre for Social and Economic Research,
Iceland
Centre for Civil Society, India
The Institute for Development of Economics
and Finance, Indonesia
Open Republic Institute, Ireland
Institute for Advanced Strategic and
Political Studies, Israel
Centro Einaudi, Italy
Bureau d'Analyse d'Ingenierie et de
Logiciels (BAILO), Ivory Coast
African Research Center for Public Policy
and Market Process, Kenya
Center for Free Enterprise, Korea
Economic Policy Institute-Bishkek
Consensus, Kyrgyz Republic
Lithuanian Free Market Institute, Lithuania
D'Letzeburger Land, Luxembourg
Centro de Investigación para el Desarrollo
A.C., Mexico
Open Society Forum, Mongolia
The Center for Entrepreneurship and
Economic Development, Montenegro
The New Zealand Business Roundtable, New
Zealand
Institute of Public Policy Analysis, Nigeria
Civita – Center for Business and Society
Alternate Solutions Institute, Pakistan
Fundación Libertad, Panama
Centro de Investigación y Estudios
Legales (CITEL), Peru
The Center for Research and
Communication, Philippines
Centrum im. Adama Smitha, Poland
Causa Liberal, Portugal
Romania Think Tank, Romania
Institute of Economic Analysis, Russia
The F.A. Hayek Foundation, Slovak
Republic
The Free Market Foundation of Southern
Africa, South Africa
Pathfinder Foundation
, Sri Lanka
International Research Foundation
(IRF), Sultanate of Oman
Timbro, Sweden
Liberales Institut, Switzerland
Arthur Lok Jack Graduate School of
Business, The University of the West
Indies, Trinidad, W.I.
Association for Liberal Thinking, Turkey
The Ukrainian Center for Independent
Political Research, Ukraine
The Institute of Economic Affairs, United
Kingdom
CATO Institute, USA
The Centre for the Dissemination of
Economic Knowledge (CEDICE),
Venezuela
Research Center for Entrepreneurship and
Development Policies, Vietnam
Free Market Center (FMC), Yugoslavia
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Zambia Institute for Public Policy Analysis
(ZIPPA), Zambia
Sample of Press Coverage for
Fraser Institute’ Economic Freedom of the World 2006
Postman, Estonia
All Africa, Africa
Ambito Financiero, ArgentinaL'Agefi Suisse, France
Press Digest, Hong Kong
El Litoral, Argentina
Reuters, Hong Kong
Daily News, Bahrain
Standard, Hong Kong
Daily Star, Beirut
Budapest Business Journal, Hungary
Mmegi, Botswana
MTI Eco News, Hungary
Ekonomika, Bratislava
Business Weekly, Iceland
Capital Weekly, Bulgaria
Frettabladid, Iceland
Investor, Bulgaria
Business Standard, India
Novinar, Bulgaria
Times of India, India
Economist, International
Sega, Bulgaria
Zeev Klein, Israel
Sofia Echo, Bulgaria
Corrier Economica, Italy
Calgary Herald, Canada
Il Corriere della Sera, Italy
Vancouver Sun, Canada
Il Tempo, Italy
Globe and Mail, Canada
Indiscreto, Italy
National Post, Canada
Jakarta Post, Jakarta
South China Morning Post, Korea Economic Daily, Korea
China
Korea Herald, Korea
Xinhua News Agency, China Korea Times, Korea
Business Day, Colombia
Seoul Daily, Korea
La Colombiano, Colombia
Yon Hap News, Korea
Latvian News Agency, Latvia
La Republica, Colombia
Bernama Daily, Malaysia
Portafolio, Colombia
La Prensa Libre, Costa Rica Business Times, Malaysia
Daily Express, Malaysia
Baltic Business Weekly, Estonia
El Economista, Mexico
El Financiero, Mexico
El Universal, Mexico
Tiempo, Mexico
Daily News, Montenegro
Daily Press, Montenegro
Mina business, Montenegro
Pobjeda, Montenegro
Faz.Net, Netherlands
International Herald Tribune, New Zealand
Business Recorder, Pakistan
Poland Today, Poland
Rompres, Romania
BBC Monitoring, Russia
Kommersant, Russia
Biz Day, South Africa
Business Day, South Africa
Mail and Guardian, South Africa
News 24, South Africa
Sunday times, South Africa
Libertad Digital, Spain
Taipei Times, Taiwan
Bangkok Post, Thailand
Turkish Daily News, Turkey
Business Journal, US
TCS Daily, US
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Washington Times, US
Sub-national and Regional Indices
14
Economic Freedom of the Arab World
15
Marketization Index of Chinese Provinces
16
Economic Freedom Index of Indian States
17
Economic Freedom Index of
Argentinean Provinces
18
Economic Freedom of North America
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Introducing the 2007 Economic
Freedom of the World Index Results
Oman’s
Achievement
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Oman and the World
 Oman
is one of the world’s top 20
economically free nations
 Oman and the UAE are essentially tied
as the freest nations in the Arab world
 Oman is well ahead of the world
average
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Economic Freedom: The World
Oman
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
23
Economic Freedom Over Time
Economic Freedom Score
8
6
4
1990
1995
2000
2001
World Average
2002
2003
2004
2005
Oman
24
Source: The Fraser Institute.
Economic Freedom: The Top 20!!
Hong Kong
Singapore
New Zealand
Switzerland
United States
United Kingdom
Canada
Estonia
Ireland
Australia
Luxembourg
Iceland
Finland
Chile
Netherlands
Denmark
Unit. Arab Em.
Oman
Germany
El Salvador
Austria
World average
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
25
Size of Government: Top 20
El Salvador
Hong Kong
Singapore
United States
Unit. Arab
Switzerland
Estonia
Iceland
Canada
New Zealand
United
Australia
Chile
Ireland
World
Germany
Oman
Luxembourg
Austria
Finland
Netherlands
Denmark
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
26
Sound Money: Top 20
United States
Singapore
Luxembourg
Canada
Switzerland
Ireland
New Zealand
Finland
El Salvador
Austria
Hong Kong
Germany
Denmark
Netherlands
Estonia
United Kingdom
Australia
Oman
Chile
Iceland
Unit. Arab Em.
World Average
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
27
Freedom to Trade: Top 20
Hong Kong
Singapore
Ireland
Chile
Unit. Arab
Netherlands
Estonia
Luxembourg
New Zealand
Germany
Denmark
Austria
United
Canada
Finland
United States
Switzerland
Oman
Australia
El Salvador
World
Iceland
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
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Credit Market Regulation: Top 20
New Zealand
Estonia
United
Finland
El Salvador
Oman
Hong Kong
Chile
Australia
Ireland
Luxembourg
United States
Denmark
Canada
Austria
Netherlands
Singapore
Iceland
Switzerland
World Average
Unit. Arab Em.
Germany
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
29
Labour Market Regulation: Top 20
Hong Kong
Singapore
Switzerland
United States
New Zealand
Oman
Iceland
Denmark
United
Chile
Canada
Australia
Unit. Arab Em.
Luxembourg
Estonia
El Salvador
Netherlands
World Average
Ireland
Finland
Austria
Germany
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
30
Business Regulation: Top 20
Finland
Iceland
New Zealand
Denmark
Singapore
Hong Kong
Canada
Australia
Ireland
Switzerland
Estonia
Germany
United States
Austria
Chile
Luxembourg
United
Unit. Arab Em.
Oman
Netherlands
El Salvador
World Average
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
31
Oman’s Achievement:
Focus on the legal system

Single most important factor for economic
freedom
– Property rights and contracting particularly
important for economic growth

Institutional improvement is the greatest
challenge faced by all nations
 Oman has great achievements
– Leads the Arab world and the vast majority of
other nations including France and Belgium
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Oman’s Achievement over time
10
9
8
7
6
5
4
3
2
1
0
1990
1995
2000
Legal system
2005
33
Legal System: Top 20
Denmark
New Zealand
Iceland
Netherlands
Switzerland
Finland
Germany
Australia
Luxembourg
United Kingdom
Austria
Canada
Singapore
Ireland
Hong Kong
United States
Oman
Estonia
Chile
Unit. Arab Em.
World Average
El Salvador
0
2
Source: The Fraser Institute.
4
6
Score (out of 10)
8
10
34
Why is Economic Freedom
Important
35
Per Capita Income and Economic
Freedom Quartile
GDP Per Capita
(ppp), 2005
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free …………… Most Free
Sources: The Fraser Institute; The World Bank, World Development
Indicators CD-ROM, 2007.
36
Per Capita Income of Poorest 10%
and Economic Freedom
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Least Free Quartile
3rd Quartile
2nd Quartile
Most Free Quartile
Least Free …….. Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators37
CD-ROM, 2007.
The impact of Economic Freedom on
the UN’s Human Development Index
and other indicators of well-being
38
United Nations
Human Development
Index
Human Development Index and
Economic Freedom Quartiles
1.0
0.8
0.6
0.4
0.2
0.0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free ……………. Most Free
Sources: The Fraser Institute; United Nations Development Programmme, Human
Development Indicators 2006, available at http://hdr.undp.org/.
39
Life Expectancy at Birth and
Economic Freedom Quartiles
80
Years
60
40
20
0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free ……………. Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators CD-
ROM, 2007.
40
Per 1,000 live births, 2005
Infant Mortality and Economic
Freedom Quartile
80
60
40
20
0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free ………..…. Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators
CD-ROM, 2007.
41
% of Population Using Improved
Water Sources
100
Percentage
80
60
40
20
0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free …………….. Most Free
Sources: The Fraser Institute; The World Bank, World Development Indicators
CD-ROM, 2007.
42
Economic Freedom lays the foundation
for the natural evolution of other
freedoms and democracy over time
43
Economic Freedom and Political Rights
Lower ratings indicate higher level of political rights
Political Rights
(out of 10)
5.0
4.0
3.0
2.0
1.0
0.0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free ……………. Most Free
Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings,
1972 through 2005, available at http://www.freedomhouse.org/.
44
Economic Freedom and Civil Liberties
Lower ratings indicate higher level of civil liberties
Civil Liberties
(out of 10)
5.0
4.0
3.0
2.0
1.0
0.0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free …….. Most Free
Sources: The Fraser Institute; Freedom House, Freedom in the World Country
Ratings, 1972 through 2005, available at http://www.freedomhouse.org/.
45
Economic Freedom Versus Corruption
Higher value indicates lower level of corruption
Corruption Rating
(out of 10)
10
8
6
4
2
0
Least Free
Quartile
3rd Quartile
2nd Quartile
Most Free
Quartile
Least Free ………….. Most Free
Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index,
available at http://www.transparency.org.
46
Increasing the
Economic Freedom of Omanis
47
Increasing economic freedom

Reduce Size of Government
– High government consumption (35.5% of total
consumption) can crowd out private sector
initiatives and reduce economic freedom
48
Increasing economic freedom

Legal structure: Oman’s achievements are
great but improvements are possible
– Legal enforcement of contracts (6.4 out of 10)
should be more certain and timely
49
Oman has a bright future

Oman already has high achievement in
economic freedom
 Oman has steadily increased its economic
freedom
 Far-sighted leaders like Salem and Azzan
and many others are committed to
increasing the economic freedom and wellbeing of Omanis.
50
Conclusions
Economic Freedom

Increases prosperity for all
 Reduces poverty
 Increases other freedoms
 Improves quality of life
All this can be seen in today’s data
and lessons from history
51
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www.fraserinstitute.ca
52