Freedom as the Key to Prosperity: Lessons from the World's Growth Miracles and Economic Disasters

Abstract

What do China, Estonia, Germany, India, Chile, South Korea and Slovakia all have in common? At first glance, not a lot. All have their own cultures, traditions and politics. But one important aspect of their histories unites them: They have all enacted free-market reforms, and have seen their inhabitants’ living standards soar as a result. This essay describes how free-market policies have improved economic performance in these “growth miracles.” We will also draw contrasts with the policies adopted by governments in some “economic disasters” - countries that have failed to improve the economic well-being of their populations. The lessons we learn from these comparisons paint a clear picture: A country’s economy performs best when its policies lead to greater economic freedom, limit the role of government, and promote respect for the rule of law.

Keywords: economic growth, economic freedom, rule of law, economic development, limited government, political economy

JEL Classification: O1, P48, O4