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Economic Freedom: The Top, the Bottom, and the Reality. I. 1997–2007

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journal contribution
posted on 2022-05-18, 11:04 authored by Marcel Ausloos, Philippe Bronlet
We recall the historically admitted prerequisites of Economic Freedom (EF). We have examined 908 data points for the Economic Freedom of the World (EFW) index and 1884 points for the Index of Economic Freedom (IEF); the studied periods are 2000–2006 and 1997–2007, respectively, thereby following the Berlin wall collapse, and including 11 September 2001. After discussing EFW index and IEF, in order to compare the indices, one needs to study their overlap in time and space. That leaves 138 countries to be examined over a period extending from 2000 to 2006, thus 2 sets of 862 data points. The data analysis pertains to the rank-size law technique. It is examined whether the distributions obey an exponential or a power law. A correlation with the country’s Gross Domestic Product (GDP), an admittedly major determinant of EF, follows, distinguishing regional aspects, i.e., defining 6 continents. Semi-log plots show that the EFW-rank relationship is exponential for countries of high rank (≥20); overall the log–log plots point to a behaviour close to a power law. In contrast, for the IEF, the overall ranking has an exponential behaviour; but the log–log plots point to the existence of a transitional point between two different power laws, i.e., near rank 10. Moreover, log–log plots of the EFW index relationship to country GDP are characterised by a power law, with a rather stable exponent (γ≃0.674) as a function of time. In contrast, log–log plots of the IEF relationship with the country’s gross domestic product point to a downward evolutive power law as a function of time. Markedly the two studied indices provide different aspects of EF.

Funding

M.A. has been partially supported by a grant of the Romanian National Authority for Scientific Research and Innovation, CNDS-UEFISCDI, project number PN-III-P4-IDPCCF-2016-0084.

History

Citation

Entropy 2022, 24(1), 38

Author affiliation

School of Business

Version

  • VoR (Version of Record)

Published in

Entropy

Volume

24

Issue

1

Publisher

MDPI AG

eissn

1099-4300

Acceptance date

2021-12-20

Copyright date

2021

Available date

2022-05-18

Language

en

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