New Research: Economic Freedom and Productivity Growth in Resource-rich Economies

A new paper by Minoo Farhadi [monash.edu.au], Md. Rabiul Islam [academia.edu], Solmaz Moslehi from Monash [moslehi.me] and Deakin Universities, Australia

published in World Development

Economic Freedom and Productivity Growth in Resource-rich Economies

Abstract:

The focus of this paper is to test whether free market institutions that protect property rights and support freedom of choice and voluntary exchange can change the curse of natural resources into a blessing. To examine the above question, this paper uses the Fraser Institute’s economic freedom index and its five sub-indices, namely government size, property rights, access to sound money, freedom to trade, and setting proper regulations. Using data from 99 sample countries over the period 1970–2010, the system GMM estimates suggest that the negative growth effects of resource rents may turn positive in countries with greater economic freedom.