Economic Freedom and World Economic Growth: Evidence and Implications

The purpose of this study is to explain the statistical variation in economic growth rates in a broad cross-section of countries, over the period 1980-1999. This problem will be addressed within the framework of the so-called "growth-regression" approach, which seeks to explain this variation by relating economic growth to a list of potential explanatory variables. A large number of studies published since the early 1 990's have been based on the so-called "neo-classical theory of economic growth," and this approach will be followed as a first approximation, though the main purpose of the paper is to evaluate the incremental explanatory power of several additional variables not usually contemplated in the conventional neo-classical approach.