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Economic Freedom and Economic Growth

The new edition of the Cato Journal has this excellent article by James Gwartney, Randall Holcombe, and Robert Lawson: “Economic Freedom, Institutional Quality, and Cross-Country Differences in Income and Growth.”

Examining data on 99 countries from 1980 to 2000, the authors find that greater economic freedom (as measured here):

         means more investment as a share of GDP

         means higher annual growth of capital per worker

         means higher productivity of investment

         requires from five to ten years to reach its maximum potential at increasing prosperity

It’s a compelling read.

Also, while you’re at the Cato Journal, check out this fine article by George Mason University graduate students Chris Coyne and Peter Leeson, and this splendid review by Bill Niskanen of the first volume of the selected works of Gordon Tullock.


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