Economic Freedom of the World

Economic Freedom of the World is an annual survey published by the libertarian Fraser Institute, a Canadian think tank. The survey attempts to measure the degree of economic freedom in the world's nations. It has been used in peer-reviewed studies some of which have found a range of beneficial effects of more economic freedom, but countries with higher economic freedom suffered more in output growth during the late-2000s financial crisis.

One of the earliest measures of economic freedom was developed by Freedom House, which has done extensive work on the measurement of political and cultural freedom. This measure incorporated a range of indicators including freedom to establish a business and freedom of union organisation.

Partly in response to dissatisfaction with the Freedom House index from advocates of a libertarian or market liberal viewpoint, Milton Friedman and Michael Walker of the Fraser Institute hosted a series of conferences on economic freedom. Eventually this resulted in a report on worldwide economic freedom, Economic Freedom of the World. Later the Heritage Foundation and the Wall Street Journal created another similar index, the Index of Economic Freedom.

The participants in the conferences reached a consensus that the cornerstones of economic freedom are:

The 2005 report states "When the functions of the minimal state—protection of people and their property from the actions of aggressors, enforcement of contracts, and provision of the limited set of public goods like roads, flood control projects, and money of stable value—are performed well, but the government does little else, a country’s rating on the EFW summary index will be high. Correspondingly, as government expenditures increase and regulations expand, a country’s rating will decline."

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