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Economic Systems and Freedom

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Problem 1
Over the last 15 years the Heritage Foundation and the Wall Street Journal have joined forces to produce an annual Index of Economic Freedom. This index defines 10 economic freedoms used to measure the level of economic freedom in countries around the world. Explore the website for the Index of Economic Freedom. Be sure to read the executive summary and pay particular attention to the graph labeled Economic Freedom and Poverty and the graph labeled Economic Freedom and Economic Growth before you leave the website.

Requirements: A) Based on your reading of material from the Index of Economic Freedom, describe the relationship between economic freedom and variations in wealth among countries. B) Select a country from the Index and bring in additional source material to explain its ranking and how it has changed over the last 5-10 years.

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Solution Preview

The index of economic freedom can be found here: http://www.heritage.org/index/default. On page five of the Executive Highlights (http://www.heritage.org/index/download) you will find bar graphs entitled "Economic Freedom and Poverty" and "Economic Freedom and Economic Growth." Note how as economic freedom increases, poverty declines. Note on the graph of Economic Freedom and Economic Growth we see the opposite relationship.

Poverty and economic growth are related. Without economic growth, there is less income, and people become poorer over time. So it is not surprising that the two would go together. What we need to think about, then, is why economic freedom is important to economic growth.

First, we should define economic freedom. Economic freedom is granted to people when they have the autonomy to follow through with creative ideas ...

Solution Summary

Using the index of economic freedom to determine how economic freedom has changed in a country over the last 5-10 years.

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