The Economic Freedom Index provides a system tomeasure the level of economic freedom based on five major components (Gwartney , Lawson, & Hall, 2017). The index allowsresearchers to study the relationship between government policies, howdeveloped a country is, and how economically free a country is. The EconomicIndex is a good tool for policy makers and researchers to examine the country’scurrent policies, and where they can improve.The concept of economic freedom is that ofself-ownership, that is people are free to choose and make their own decisionsas long as it does not interfere with others (Gwartney , Lawson, & Hall, 2017).
One of the problemswith the Economic Freedom Index, is that it did not previously adjust forgender inequality (Gwartney , Lawson, & Hall, 2017). However, there isstill an issue as the index only adjusts for data based on legal differencesonly. Many communities will discriminate against women culturally, andtraditionally. Although cultural practices are not legally enforced, many womenare not given a choice. These traditions could mean that a woman is not allowedto attend school.
This should be accounted for in the EFW rating, as women arenot making these decisions for themselves. The EFW rating can help to encouragecountries to provide the same standard of living to everyone regardless oftheir gender.Furthermore, countries are able to compare themselvesagainst others in the same region.
By doing so, they are able to see where theyare able to improve by implementing different policies. Researches also use theEFW rating to compare differences in how countries are performing economically (Gwartney , Lawson, & Hall, 2017). Countries that arenot performing as well can utilize this report in order to see which areas theyneed to improve upon.
They can also use this as a chance to change theireconomic policies, so they better reflect those in their region that havescored a high EFW rating. As discussed in the report, a country with a small fiscalgovernment cannot ensure economic freedom maximized for the country’s currentcapabilities (Gwartney , Lawson, & Hall, 2017). Countries that rankpoorly in the components related to a capable government can use these indicatorsto possible change their political structure. These countries also typicallyrank poorly in the trade and, regulation area of the EFW rating (Gwartney , Lawson, & Hall, 2017). These nations couldfurther enhance economic growth by improving in these areas.
One of the manybenefits is, increased trade will lead to increased income, which will decreasepoverty, and increase standards of living.The EFW is a good measure for policy makers, andresearchers to gauge how the policies, and regulations are performing in acountry. As reported, developing countries experience much more rapid growth inthe average EFW rating, than developed countries (Gwartney , Lawson, & Hall, 2017). This higher EFWrating leads to a higher per-capita income, lower poverty rates, longer lifespans, more political and civil liberties, gender equality, and higher levelsof happiness (Gwartney , Lawson, & Hall, 2017). Countries can alsocompare themselves against others inside their regions, and finds ways toimprove their current policies.
This will allow for greater economic growthwhen a better policy is implemented. Economic freedom is linked to a better standard ofliving for citizens. As reported, developing countries experience a much morerapid growth in the average EFW rating compared to developed countries (Gwartney , Lawson, & Hall, 2017). Countries can use this as anindication to see if they are headed in the right direction. They are able tochange their policies in order to achieve a EFW measure, which translates to ahigher standard of living for citizens. A higher EFW measure, also means that ahigher rate of economic growth. This can help close the gap between developing,and developed countries.