The Cause of Economic Freedom - A Model of Prosperity

Economic freedom in the form of open markets and minimal government intervention has been demonstrated in numerous studies to be the most effective approach for achieving wealth and prosperity around the world. This paper examines various sociopolitical and geographic variables as well as changes in their values over time to determine their potential causal impact on the level of economic freedom across a large array of countries. It hypothesizes that democratic governance is of prime influence on free market growth. Having been established as a beneficiary of free markets, Gross Domestic Product (GDP) levels are analyzed for reciprocal causality regarding economic freedom levels, while corruption, civil rights, religiosity, and geography are also explored as potential economic freedom determinants. Of the variables explored, only democratic governance, corruption, and changes to GDP were found to be statistically significant, along with certain regional categories primarily located in Africa. The other variables of interest, initial GDP levels, fundamental rights, and religiosity were not found to be significantly related to economic freedom. This study also found that changes in economic freedom ratings over time were significantly related only to changes in GDP levels, of all the variables studied. The lack of statistical significance found in the initial GDP variable was an unexpected result that potentially calls into question prior research indicating a stronger relationship to economic freedom