The concept and measurement of economic freedom

Abstract Since 1996, the Economic Freedom of the World (EFW) reports have presented an index that measures the consistency of a nation's policies and institutions with economic freedom. The key ingredients of economic freedom are personal choice, voluntary exchange, freedom to compete, and protection of person and property. Earlier versions of the EFW index have been based almost exclusively on objective quantifiable data. However, some important elements of economic freedom, particularly those dealing with property rights and regulatory restraints, are difficult to capture with objective measures. This paper integrates survey data on legal structure and government regulation into the EFW index and uses it to develop a more comprehensive measure of economic freedom.

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