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Competitio

Vol. 9 No. 1 (2010)
Papers

Economic Freedom and the Process of Economic Growth: An Empirical Analysis Based on a New Measure

Published:
2010-06-14
DOI Linkhttps://doi.org/10.21845/comp/2010/1/1
Authors
Judit Kapás,
Pál Czeglédi
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Keywords
economic freedom institutions rule of law government interventionalism
How To Cite
Selected Style: APA
Kapás, J., & Czeglédi, P. (2010). Economic Freedom and the Process of Economic Growth: An Empirical Analysis Based on a New Measure. Competitio, 9(1), 5-30. https://doi.org/10.21845/comp/2010/1/1
Abstract

This paper, relying on a conceptualization of economic freedom in terms of kinds of government actions, develops a new measure of economic freedom. However, this is not art for art’s sake; instead, it allows us to provide an explanation for how particular institutions of economic freedom enhance economic development, a view upon which scholars agree. We develop two concepts related to economic freedom, namely the freedom-compatible and freedom-non-compatible institutions and use them as tools in an analysis of the process of economic growth, especially the relationship between economic freedom and long-run income. The major argument is that freedom-compatible institutions are primary determinants of income, while freedom-non-compatible institutions depend upon them and are partly the outcomes of the growth process itself, a fact which is explained by the Misesian theory of interventionism. Our regression analyses support our theoretical insights.

JEL Classification: B53, H10, O10

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