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24“The datamay lead to abetter understandingofthe role offreedom inhumanprogress.”to propose alternative weighting or structuralapproaches that seem more sensible to them.Because of the challenges in putting togethera broad measure of human freedom, this workin progress is certainly not the last word onthe extent of freedom in countries around theworld. But we do think this index is quite reasonableand hope it will be useful in exploringand demonstrating the value of individual libertyand the ways in which it correlates withother aspects of various societies.Even if this study confirms some of whatwe expected to observe, it is worth echoingMilton Friedman when he referred to the creationof the economic freedom index: “Whatwe have done is to acquire a set of data thatcan be used to explore just how the relationworks, and what are the essential connections,and that will enable skeptics to test their viewsobjectively.” 21Indeed, the Economic Freedom of the Worldindex has served just that purpose and more,producing an abundant literature on the linkbetween economic freedom and phenomenaas diverse as foreign aid, armed conflict, andhappiness. The Human Freedom Index has thepotential to do as much and looks increasinglyimportant at a time when the world’s leadingmarket democracies struggle with economicproblems and when hybrid forms of authoritarianismare being sold as viable alternativesto liberalism. Over time, this index could tracknot only specific gains and losses of freedom;it could also help to see what links may existbetween the assortment of freedoms andother variables. What are the relationshipsamong personal freedom, economic freedom,and democracy at different levels of development?Are some types of freedom, economicor personal, more conducive to the spreadand sustenance of other freedoms? What isthe relationship between various measuresof human well-being (including income) andchanges in personal freedom? Under whatconditions are increases or decreases in freedomlikely to come about? Delving into thoseand innumerable other questions that the datamay help us to answer will surely lead to a betterunderstanding of the role of freedom in humanprogress.APPENDIX A: AREAS, COMPONENTS, AND SUB-COMPONENTS OF THEECONOMIC FREEDOM OF THE WORLD INDEX1. Size of GovernmentA. Government consumptionB. Transfers and subsidiesC. Government enterprises and investmentsD. Top marginal tax rate(i) Top marginal income tax rates(ii) Top marginal income and payroll tax rate2. Legal System and Property RightsA. Judicial independenceB. Impartial courtsC. Protection of property rightsD. Military interference in rule of law and politicsE. Integrity of the legal systemF. Legal enforcement of contractsG. Regulatory restrictions on the sale of real property
25H. Reliability of policeI. Business costs of crime3. Sound MoneyA. Money growthB. Standard deviation of inflationC. Inflation: most recent yearD. Freedom to own foreign currency bank account4. Freedom to Trade InternationallyA. Tariffs(i) Revenue from trade taxes (% of trade sector)(ii) Mean tariff rate(iii) Standard deviation of tariff ratesB. Regulatory trade barriers(i) Non-tariff trade barriers(ii) Compliance costs of importing and exportingC. Black-market exchange ratesD. Controls of the movement of capital and people(i) Foreign ownership/investment restrictions(ii) Capital controls(iii) Freedom of foreigners to visit5. RegulationA. Credit market regulations(i) Ownership of banks(ii) Private sector credit(iii) Interest rate controls/negative real interest ratesB. Labor market regulations(i) Hiring regulations and minimum wage(ii) Hiring and firing regulations(iii) Centralized collective bargaining(iv) Hours regulations(v) Mandated cost of worker dismissal(vi) ConscriptionC. Business regulations(i) Administrative requirements(ii) Bureaucracy costs(iii) Starting a business(iv) Extra payments/bribes/favoritism(v) Licensing restrictions(vi) Cost of tax compliance
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Page 5: TABLE OF CONTENTSAcknowledgments...
Page 9 and 10: INTRODUCTION:WHY WE NEED FREEDOM AN
Page 11 and 12: THE HUMAN FREEDOM INDEX:A GLOBAL ME
Page 13 and 14: Isaiah Berlin best elucidated this
Page 15 and 16: 2008, 153 countries for the year 20
Page 17 and 18: Table 1 Continuediv. Freedom of Acc
Page 19 and 20: ty [1Biii]. It is made up of three
Page 21 and 22: 15Table 2 ContinuedRank Country Per
Page 23 and 24: 17Table 2 ContinuedRank Country Per
Page 25 and 26: expected. The top jurisdictions in
Page 27 and 28: 21Figure 4Average Freedom Index Sco
Page 29: Figure 7Human Freedom vs. Democracy
Page 33 and 34: 27APPENDIX C: DESCRIPTION AND METHO
Page 35 and 36: 29Source: The general rule for coun
Page 37 and 38: 31converted the OECD scores into a
Page 39 and 40: 33tonomy (scale from 1 to 4 for 200
Page 41 and 42: 35iii. Political pressures and cont
Page 43 and 44: 37APPENDIX D: HUMAN FREEDOM INDEX 2
Page 45 and 46: 39APPENDIX D Continued2008 Human Fr
Page 55 and 56: 49APPENDIX E: HUMAN FREEDOM INDEX 2
Page 57 and 58: 51APPENDIX E Continued2010 Human Fr
Page 69 and 70: 63APPENDIX F Continued2011 Human Fr
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75APPENDIX G: HUMAN FREEDOM INDEX 2
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77APPENDIX G Continued2012 Human Fr
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89APPENDIX H ContinuedRank Country
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91APPENDIX H ContinuedRank Country
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93APPENDIX I ContinuedRank Country
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95APPENDIX I ContinuedRank Country
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97APPENDIX J ContinuedCountry 2008
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99APPENDIX J ContinuedCountry 2008
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101APPENDIX K ContinuedMiddle East
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103APPENDIX L ContinuedRankCountryP
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105APPENDIX L ContinuedRankCountryP
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107Carlos Botero and Alejandro Ponc
Page 116:
www.cato.orgwww.fraserinstitute.org
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