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Market‐oriented institutions and policies and economic growth: A critical survey
Author(s) -
De Haan Jakob,
Lundström Susanna,
Sturm JanEgbert
Publication year - 2006
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.0950-0804.2006.00278.x
Subject(s) - economics , index (typography) , liberalization , economic freedom , causality (physics) , economic liberalization , politics , index of economic freedom , macroeconomics , international economics , public economics , market economy , political science , physics , quantum mechanics , world wide web , computer science , law
. This paper surveys recent evidence suggesting that market‐oriented institutions and policies are strongly related to economic growth, focusing on studies using the economic freedom (EF) indicator of the Fraser Institute. This index is critically discussed. Also various serious shortcomings of empirical studies using this index are identified. Nevertheless, there are strong indications that liberalization, i.e. an increase in the EF index, stimulates economic growth. This paper also reviews studies on the determinants of EF. Political liberalization is often found to enhance economic liberalization, whereas there is less evidence for causality running in the other direction.