Economic freedom reduces poverty

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Has Doing Business whet your appetite for country rankings? Yesterday Cato and the Fraser Institute released the 10th annual Economic Freedom of the World report. They found that economic freedom has a greater impact than foreign aid in helping people in poor nations escape poverty. William Easterly contributed a chapter to the report in which he uses the economic freedom data to test for the impact of economic freedom and aid on growth. According to the press release:

Demonstrating that foreign aid has no positive impact on economic growth in the poorest nations, Easterly's research shows that economic freedom has a positive impact on prosperity and helping lift nations out of poverty.

The book defines economic freedom as personal choice, voluntary exchange, freedom to compete, and security of privately owned property. Hong Kong comes in first, with Singapore a close second. Chile, as always, leads Latin America, and Botswana is the freest economy in Africa. The entire report is available online, as well as a podcast from Cato’s Ian Vasquez.

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