1. The Economic Freedom of
the World: 2011 Report
Economic Freedom Overview:
Benefits, Arab and World data,
and Index Comparisons.
Fred McMahon
Vice-president International Research
The Fraser Institute

2. Economic Freedom of the
World Project
• Objective: find a way to measure economic
freedom and explore the connection
between it and other variables
• 30 year project
• Led by the late Milton Friedman and Rose
Friedman, and Michael Walker
• Involved 60 of the world’s top scholars

3. What is the Economic
Freedom of the World Index?
• An annual compilation of data representing factors
which make a country economically free
• Authors: James Gwartney, Robert Lawson, and Joshua
Hall
• A compendium of 42 government policies 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 80 nations and
territories

4. 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

5. Components of the Economic
Freedom of the World Index
•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
Based entirely on objective, third party
data and independent surveys for 141
countries

6. The Fraser World Index
and the Arab Economic
Freedom Index
Compared to the Competition

7. ECONOMIC FREEDOM INDICES
• The Fraser non-quantitative variables are in
fact transparent and because of this, they are
replicable. In each case, the Fraser analysts
explain how they obtained and scored these
variables.
• The Heritage report's quantitative variables
are much less transparent and, as a result are
not reliably replicable by outsiders.

8. USAID MISSION/CAIRO:
The argument for preferring the Fraser … index to the Heritage
method is as follows:
• First, the Fraser Index is decidedly less ideological in
composition and more strongly based in economic theory …
• Second, its methodology has consistently been far more
transparent;
• Third, the Fraser analysts see their index as an evolving tool,
introducing methodological modifications in each succeeding
report as continuing research may indicate—and doing so in
transparent fashion;
• Fourth, the lengthy time series of Fraser Index values for
Egypt give us a 'track record' that can be compared to actual
historical conditions;
• Finally, the Fraser analysts confine their efforts to a smaller
sample of countries, which may be possibly indicative of
greater care and selectivity in the use of available data.

9. Another difference
Talk about making an impact…

10. Member Institutes of Economic Freedom of
The World Network
Afghanistan Economic and Legal Studies Liberales Institut, Germany
Organization (AELSO), Afghanistan The Institute of Economic Affairs, Ghana
Albanian Center for Economic Research (ACER), Centro de Investigaciones Económicas Nacionales, Initiative for Public Policy Analysis, Nigeria
Albania Guatemala Center for Business and Society Incorporated (Civita),
Fundación Libertad, Argentina InafEcon-Institute of African Economics, Guinea Norway
Centre of Political, Legal and Economic Researches Institut de Recherche pour la Liberté Economique et la International Research Foundation (IRF), Oman
and Forecasting (PLERF), Armenia Prospérité (IRLEP), Haiti Alternate Solutions Institute, Pakistan
Institute of Public Affairs, Australia Centro de Investigaciones Economicas y Sociales (CIES), Pal-Think for Strategic Studies, Palestine
TIGRA®, Austria Honduras Fundación Libertad, Panama
Center for Economic and Political Research, Hong Kong Centre for Economic Research, Hong Kong Centro de Investigación y Estudios Legales (CITEL), Peru
Azerbaijan Szazadveg Foundation, Hungary The Center for Research and Communication, Philippines
The Nassau Institute, Bahamas Centre for Social and Economic Research (RSE), Iceland Centrum im. Adama Smitha, Poland
Making Our Economy Right (MOER), Bangladesh Centre for Civil Society, India Causa Liberal, Portugal
Scientific Research Mises Center, Belarus The Institute for Development of Economics and Finance, Romania Think Tank, Romania
Centre for the New Europe, Belgium Indonesia Institute of Economic Analysis, Russia
Politicas Publicas para la Libertad (POPULI), Bolivia Open Republic Institute, Ireland Free Market Center (FMC), Serbia
Instituto Liberal do Rio de Janeiro, Brazil Jerusalem Institute for Market Studies, Israel The F.A. Hayek Foundation, Slovak Republic
Institute for Market Economics, Bulgaria Centro Einaudi, Italy The Free Market Foundation of Southern Africa, South
Le Centre des Affaires Humaines (CEDAH), Burkina Young Entrepreneurs Association, Jordan Africa
Faso Central Asian Free Market Institute, Kazakhstan Fundacio Catalunya, Spain
The Cambodia Institute of Development Study, African Research Center for Public Policy and Market Pathfinder Foundation, Sri Lanka
Cambodia Process, Kenya Nile Institute of Economic Studies, Sudan
Instituto Libertad y Desarrollo, Chile Center for Free Enterprise, Korea Timbro, Sweden
Center for China & Globalization, China Group for Legal and Political Studies, Kosovo Liberales Institut, Switzerland
Instituto de Ciencia Politica, Colombia Economic Policy Institute-Bishkek Consensus, Kyrgyz Tajikistan Free Market Centre, Tajikistan
Instituto para la Libertad y el Análisis de Políticas, Republic Arthur Lok Jack Graduate School of Business, The
Costa Rica Lithuanian Free Market Institute, Lithuania University of the West Indies, Trinidad and Tobago
Audace Institut Afrique, Côte d’Ivoire D'Letzeburger Land, Luxembourg Association for Liberal Thinking, Turkey
The Institute of Economics, Croatia Institute for Democracy and Economic Affairs (IDEAS), The Ukrainian Center for Independent Political Research,
Liberální Institut, Czech Republic Malaysia Ukraine
Center for Politiske Studier (CEPOS), Denmark Centro de Investigación para el Desarrollo A.C., Mexico The Institute of Economic Affairs (IEA), United Kingdom
Fundación Economía y Desarrollo Inc, Dominican Open Society Forum, Mongolia CATO Institute, USA
Republic The Center for Entrepreneurship and Economic The Centre for the Dissemination of Economic Knowledge
Instituto Ecuatoriano de Economía Política, Ecuador Development, Montenegro (CEDICE), Venezuela
Institut Economique Molinari, France The Prosperity Foundation, Nepal Research Center for Entrepreneurship Development,
Society for Disseminating Economic Knowledge: New The New Zealand Business Roundtable, New Zealand Vietnam
Economic School, Georgia Zambia Institute for Public Policy Analysis (ZIPPA),
Zambia

11. Translations and Sub-national and
Regional Indices

12. Economic Freedom of the Arab World

13. Economic Freedom of the World: Spanish

14. Economic Freedom of the German
Bundesländern

15. Economic Freedom of Latin America

16. Economic Freedom of Francophonie

17. Economic Freedom of North America

18. Introducing the 2011 Economic
Freedom of the World Index Results

20. Overall Economic Freedom Index
and the Top 10
Hong Kong
Singapore
New Zealand
Switzerland
Australia
Canada
Chile
United Kingdom
Mauritius
United States
0 2 4 6 8 10
Score (out of 10)
Source: The Fraser

21. Overall Economic Freedom
Index and the Bottom Ten
Chad
Burundi
Congo, Rep. Of
Guinea-Bissau
Central Afr. Rep.
Congo, Dem. R.
Angola
Venezuela
Myanmar
Zimbabwe
0 2 4 6 8 10
Score (out of 10)
Source: The Fraser

22. World Average
Economic Freedom Over Time
10
Economic Freedom Score
8
6.7
6.7
6.6
6.6
6.6
6.5
6.2
6.1
3
4
9
7
6
8
5.8
6
5.5
5
5.5
5.5
0
7
6
3
0
4
2
0
1970 1975 1980 1985 1990 1995 2000 2005 2006 2007 2008 2009
Source: The Fraser

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

24. The impact on prosperity
and development

25. Per Capita Income and Economic
Freedom Quartile
$35,000
$30,000
GDP Per Capita
$25,000
(ppp), 2009
$20,000
$15,000
$10,000
$5,000
$0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators, 2011.

26. Growth in Developing Nations Per
Capita and Economic Freedom Quartile
GDP Per Capita % Growth,
3.5
3.0
2.5
1990-2009
2.0
1.5
1.0
0.5
0.0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators,
2011.

27. Economic Freedom, the Poor, and
Inequality

28. Income Share of the Poorest 10% and
Economic Freedom
3.0%
Lowest 10%, 1990-2009
Income Share Held by
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Most Free 2nd 3rd Least Free
Quartile Quartile Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators,
2011.

29. Income of the Poorest 10% and
Economic Freedom
$9,000
Income of the Lowest
$8,000
10%, 1990-2009
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Most Free 2nd 3rd Least Free
Quartile Quartile Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators,
2011.

30. Economic Freedom, Governance,
and Democracy

31. Economic Freedom and Political Rights
Low scores indicate high level of rights
5.0
4.0
Political Rights
(out of 7)
3.0
2.0
1.0
0.0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings,
2009, available at http://www.freedomhouse.org/.

32. Economic Freedom and Civil Rights
Low scores indicate high level of rights
5.0
4.0
Civil Liberties
(out of 7)
3.0
2.0
1.0
0.0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; Freedom House, Freedom in the World Country Ratings,
2009, available at http://www.freedomhouse.org/.

33. Economic Freedom and Corruption
High scores indicate low corruption
10
Corruption Rating
8
(out of 10)
6
4
2
0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; Transparency International, Corruption Perceptions Index,
2010 available at http://www.transparency.org.

34. The impact of Economic Freedom on
other indicators of well-being

35. Economic Freedom and
Life Satisfaction
8.0
7.0
Life Satisfaction
6.0
(out of 10)
5.0
4.0
3.0
2.0
1.0
0.0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; (un)Happy Planet Index 2.0. Why good lives don't have
to cost the Earth. 2009.

36. Literacy
Male Female
100.5
80.5
60.5
40.5
20.5
0.5
Most Free Quartile 2nd Quartile 3rd Quartile Least Free
Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; United Nations Development Programmme, Human
Development Indicators 2011, available at http://hdr.undp.org/.

37. Life Expectancy at Birth and
Economic Freedom Quartiles
80
60
Years
40
20
0
Most Free 2nd Quartile 3rd Quartile Least Free
Quartile Quartile
Most Free ……………. Least Free
Sources: The Fraser Institute; The World Bank, World Development Indicators,
2011.

38. Conclusions
Economic Freedom
• Increases prosperity for all
• Reduces poverty
• Increases other freedoms
• Improves quality of life
• To achieve these gains, Malaysia
needs to increase economic freedom

39. www.freetheworld.com
www.fraserinstitute.org