According to Economic Freedom of the World, there are five major factors that determine a nation’s economic performance.
Here’s the recipe for growth and prosperity.
- Rule of law and property rights.
- Small government.
- Stable monetary policy.
- Reasonable regulatory policy.
- Free trade.
This great publication is the first thing I check when I want to see whether a country leans in the direction of markets or whether it is burdened by a lot of statism. And it allows for meaningful comparisons between nations since it relies on global data sources.
But not all economic variables have good data sources that allow apples-to-apples comparisons. It’s very difficult to measure the degree to which various governments interfere with the price system by imposing controls (either minimum or maximum price limits).
Identifying the degree of cronyism in an economy also is a challenge since there are not reliable numbers for the degree…
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