Sub-National Economic Freedom: A Review and Analysis of the Literature

Abstract

The Economic Freedom of North America (EFNA) index, which ranks the states, was first produced in 2002 and has been updated annually since 2010. The 2016 report was its twelfth edition. The EFNA index has been cited in over 200 academic articles, book chapters, and policy papers. We provide an examination of that literature. Of the 235 papers that cite the EFNA, 155 used it in an empirical study. Two-thirds of these found economic freedom to be associated with “good” outcomes (such as faster economic growth), and only one found economic freedom to be associated with a “bad” outcome. About one-third of the papers found mixed, uncertain, or insignificant relationships between economic freedom and the dependent variable under examination. Our findings are similar to those of Hall and Lawson (2014) for the literature using the Economic Freedom of the World (EFW) index, a country-level measure.

Appendix is available at: https://ssrn.com/abstract=3000579

Keywords: economic freedom, states, institutions

JEL Classification: H7, O43, P0