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Economic Freedom and Prosperity

Economic Freedom and Prosperity

The Index of Economic Freedom can be accessed at


This Index shows 10 countries as the most free:

This Index also shows 10 countries as the least free:

Explain clearly why the 10 most free countries are much more prosperous than the 10 least free countries, and support your conclusions with logical reasoning and factual evidence.

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According to the index, the ten most free countries are Hong Kong, the US, Switzerland, Denmark, Chile, Canada, Australia, New Zealand, and Ireland. The ten least free countries are North Korea, Cuba, Zimbabwe, Eritrea, Burma, Venezuela, Libya, Turkmenistan, Solomon Islands, and the DRC.

The key to economic growth is entrepreneurship. Using the US as an example, small businesses account for 64 percent of the new jobs between 1993 and the third quarter of 2008 (see http://web.sba.gov/faqs/faqIndexAll.cfm?areaid=24). It is only by encouraging small business start ups that an economy can grow. Economic growth is the key to prosperity. Without it, income stagnates and if prices rise, people find that their standards of living are declining. This leads to cut backs in spending and eventual economic recession or collapse. Small business start ups (such as Microsoft) often become huge companies that have dramatic impacts on the economy.

Why then do people in some countries take the chances involved in starting a business, while in other countries they do not? Economic freedom is the answer. Economic freedom involves the ability of people, as individuals, to ...

Solution Summary

Economic freedom around the world and how it relates to prosperity.