Economic freedom is a term used in economic research and policy debates. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom.[1][2] One major approach to economic freedom comes from the libertarian tradition emphasizing free markets and private property, while another extends the welfare economics study of individual choice, with greater economic freedom coming from a "larger" (in some technical sense) set of possible choices.[3] Another more philosophical perspective emphasizes its context in distributive justice and basic freedoms of all individuals.[4]
Today the term is most commonly associated with a classical liberal (or free market) viewpoint, and defined as the freedom to produce, trade and consume any goods and services acquired without the use of force, fraud or theft. This is embodied in the rule of law, property rights and freedom of contract, and characterized by external and internal openness of the markets, the protection of property rights and freedom of economic initiative.[5][6][3]
Indices of economic freedom attempt to measure (free market) economic freedom, and empirical studies based on these rankings have found them to be correlated with higher living standards, economic growth, income equality, less corruption and less political violence.[7][8][9][10][11] These economic freedom indices are sometimes used to rank countries by economic freedom, and are usually topped by Hong Kong and Singapore. Between 1985 and 2005, only a small number of surveyed countries did not increase their Economic Freedom of the World score.[12] Some empirical analysis suggests that the index is not closely correlated with economic growth,[13] but regression analysis of the disaggregated components suggests that some specific freedoms contribute to economic growth while others hamper it.[14]
Other conceptions of economic freedom include freedom from want[1][15] and the freedom to engage in collective bargaining.[16]
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