Chart of the week

Robert McGregor
  • 1 Week Ago - 2024-10-07 00:00:00
The Fraser Institute measures economic freedom using five major areas, namely: The size of a government, legal system and security of property rights, sound money, freedom to trade internationally and regulation. The Fraser Institute’s Economic Freedom of the World (EFW) index is designed to measure the extent to which the institutions and policies of a nation are consistent with this protective function and the freedom of individuals to make their own economic decisions.
As is observed, a country that has a higher economic freedom score/ranking tends to have a higher gross domestic product (GDP) per capita (in this instance, measured for Purchasing Power Parity to take exchange rate differences into account). Similarly, countries with higher economic freedom scores/rankings tend to have a materially lower incidences of extreme poverty.
While there are some outliers, these cases are often instances where GDP (or GDP per capita) may be skewed by some other factor. In the Middle East, this is often skewed by oil wealth, resulting in materially higher GDP per capita. Examples of these include Oman, Guyana and Libya.
Overall, Namibia ranks 113th (of 165 countries measured) for economic freedom. This puts Namibia in the third quartile. While Namibia has improved its score to decent levels for size of government and sound money, it scores poorly (and that score has deteriorated) for legal system and property rights (owing to crime and court backlogs, among other things), freedom to trade Internationally (given tariffs and other protectionist measures), and regulation (particularly on business regulation and freedom to compete).
The evidence is clear that the approach to growth, wealth creation and prosperity requires economic freedom. The provision of institutions and protections for core principles is necessary, but there must also be allowance that provides individuals – natural and juristic – the freedom to make their own economic decisions. Unfortunately, Namibia still falls short in allowing such economic freedom.