FRASER INSTITUTE AND CME: HUNDREDS OF STUDIES FIND ECONOMIC FREEDOM IMPROVES PEOPLE’S LIVES
THURSDAY, 25 August 2022: Economic freedom produces faster economic growth, higher living standards, and even increased happiness as people gain control of their lives, according to a wide-ranging research review released today by the Center for Market Education (CME) and the Fraser Institute.
«An immense amount of research shows that increasing economic freedom in Malaysia would vastly improve the lives of the people of Malaysia», said Dr Carmelo Ferlito, CEO of CME. «Such a research finding is particularly important because the policy evolution of the last three years in the country went in the direction of an increasing role of the government interference with the market process, and therefore in the direction of diminishing people’s welfare», Dr Ferlito added. «This was particularly evident in the labour legislation, in the “selective” approach to FDIs and in price ceilings».
«In the academic world, there’s a growing consensus that increased economic freedom correlates with positive outcomes for people in countries around the world», said Robert A. Lawson, professor of economics at Southern Methodist University and author of Economic Freedom in the Literature-What Is It Good (Bad) For?, a paper just released by CME and the Fraser Institute.
The review examined 721 empirical papers (published between 1996 and 2022) using the Economic Freedom of the World index, which measures economic freedom – the ability of individuals to make their own economic decisions – by analyzing policies and institutions of jurisdictions and assessing indicators such as regulation, size of government, property rights, trade openness, government spending and taxation.
More than 50 per cent of the papers reported good correlations between economic freedom and good outcomes (faster economic growth, higher living standards, reduced conflict, etc.) while about 45 per cent report mixed/null/uncertain results. Only one out of 20 papers reported a bad outcome.
«The research not only shows that economic freedom boosts prosperity and economic growth, but also leads to positive outcomes in a number of other areas», Lawson noted. «Individuals and families, when free to do so, make the best decisions for themselves, not crony elites or over-powerful government».
The majority of studies in the following areas found economic freedom was related to:
- Reduced conflict, wars, civil unrest, and terrorist attacks.
- Increased Entrepreneurship & Innovation.
- Stronger Economic Growth.
- Improved Human Rights & Social Development.
- Boosted Income & Productivity.
- Improved Labor Market Outcomes, such as reduced unemployment and increased wages and participation.
«Personal choice, voluntary exchange and open markets remain the cornerstones of economic freedom, which is key to prosperity worldwide», Lawson said.
«In order to boost sound economic growth in a moment of global uncertainty and rising price tensions, Malaysia needs to rediscover its vocation to economic openness and business-friendly attitude, and to recognize the superiority of the market process outcomes over government control and interference».
About CME: The Center for Market Education (CME) is a boutique think-tank based in Kuala Lumpur, Malaysia.
As an academic and educational institution, CME aims to promote a more pluralistic and multidisciplinary approach to economics and to spread the knowledge of a sounder economics, grounded in the understanding of market forces.
In order to do so, CME is not only involved in academic initiatives, but it organizes seminars, webinars and tailor-made economics classes for students, journalists, businesspeople and professionals who wish to better understand the relevance of economics for their daily lives and activities.
Economics matters and needs to be presented in a fashion in which the link with reality is clearly visible. In this sense, we look not only at theoretical economics but also at policy making, with an emphasis on the unintended consequences generated by political actions. Visit https://marketedu.me/.
About the Fraser Institute: The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of think-tanks in 87 countries. Its mission is to improve the quality of life for Canadians, their families and future generations by studying, measuring and broadly communicating the effects of government policies, entrepreneurship and choice on their well-being. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.