Economic Freedom of the World

242 • Economic Freedom of the World: 2016 Annual Report
10
Figure 5.3: Economic Freedom in Ireland—Chain-Linked Summary Index
and Ratings for the Five Areas, 1980, 1985, 1990, 1995, and 2000–2013
9
8
EFW Index
7
6
5
4
1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Chain-linked summary index
Area 1: Size of Government
Area 2: Legal System and Property Rights
Area 3: Sound Money
Area 4: Freedom to Trade Internationally
Area 5: Regulation
Source: Gwartney, Lawson, and Hall, 2015.
1990 and 1995. This change is the direct result of allowing Irish citizens to own and
operate foreign-currency bank accounts outside Ireland. This change arose because
of the implementation of the Single European Act. Changes associated with the act
can also account for the large increase between 1990 and 1995. The large change
in Area 1: Size of Government between 1985 and 1990 is explained by the fiscal
adjustment undertaken after 1987. From 1995 onwards the two areas that show the
greater variability are 1. Size of Government and 5. Regulation. Both tend to follow
the performance of the economy for reasons that will be explained in the next section.
(While it is not the objective of the paper to provide a detailed account of each
of these, table 5.1 illustrates the variables that measure Area 1: Size of Government.)
It is more difficult to explain the changes in the Area 2: Legal System and Property
Rights. The data on the sub-components are not available prior to 2000. In addition,
these component parts are based on survey results from the Global Competitiveness
Report. It is harder to trace these relatively subjective measures. For example, it is
possible that the high profile, failed, attempt by the Minister for Finance to nominate
a judge to the European Investment Bank reduced this sub-component in the
early 2000s.
In the case of Ireland there has been movement in all of the component and
sub-component parts since 1980, with the exception of component 2E: Integrity of
the legal system. Since data for this became available in 1995, the country has consistently
scored the top mark of 10. Other elements of each area have been more
unpredictable. Figure 5.4 is a combined graphic showing some of the more volatile
components for Ireland. To be included in this illustration, a component had to
change by +2 or −2 points on the EFW Index from the 1980 figure to the 2013 figure.
Some components moved outside this range during the period from 1980 to 2013
but revert back and finished inside the range from +2 to −2. These are not included.
A component that moves +2 or −2 in a given year or over a number of years is only
included if the change still exists in 2013.
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