Criteria Used for Economic Freedom of the World 2013 Report--How Do You Define Freedom?


These criteria are interesting inasmuch as they raise the following questions: 

--How do YOU define Freedom?
--How closely and why does economic freedom correlate to political freedom?

Remember -- THE U.S. has dropped from 2nd to 17th in the world during the past decade.

Source: Economic Freedom of the World: 2013 Annual Report
Fraser Institute ©2013 • www.fraserinstitute.org • www.freetheworld.com

Exhibit 1.1: Areas, Components, and Sub-components of the EFW Index

1. Size of Government
A. Government consumption
B. Transfers and subsidies
C. Government enterprises and investment
D. Top marginal tax rate
(i) Top marginal income tax rate
(ii) Top marginal income and payroll tax rate

2. Legal System and Property Rights
A. Judicial independence
B. Impartial courts
C. Protection of property rights
D. Military interference in rule of law and politics
E. Integrity of the legal system
F. Legal enforcement of contracts
G. Regulatory restrictions on the sale of real property
H. Reliability of police
I. Business costs of crime

3. Sound Money
A. Money growth
B. Standard deviation of inflation
C. Inflation: most recent year
D. Freedom to own foreign currency bank accounts

4. Freedom to Trade Internationally
A. Tariffs
(i) Revenue from trade taxes (% of trade sector)
(ii) Mean tariff rate
(iii) Standard deviation of tariff rates
B. Regulatory trade barriers
(i) Non-tariff trade barriers
(ii) Compliance costs of importing and exporting
C. Black-market exchange rates
D. Controls of the movement of capital and people
(i) Foreign ownership/investment restrictions
(ii) Capital controls
(iii) Freedom of foreigners to visit

5. Regulation
A. Credit market regulations
(i) Ownership of banks
(ii) Private sector credit
(iii) Interest rate controls/negative real interest rates
B. Labor market regulations
(i) Hiring regulations and minimum wage
(ii) Hiring and firing regulations
(iii) Centralized collective bargaining
(iv) Hours regulations
(v) Mandated cost of worker dismissal

(vi) Conscription