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RELATIONSHIPS IN TRENDS IN THE DEVELOPMENT OF ECONOMIC FREEDOM AND ECONOMIC GROWTH IN EU COUNTRIES

by | Dec 5, 2019 | DOI 2018

Monika Daňová, Roman Vavrek, Vierka Ivanková
​University of Prešov in Prešov, Faculty of Management, Department of Economics and Economy, Konštantínova 16, 080 78  Prešov, Slovakia
DOI: https://doi.org/10.31410/EMAN.2018.14

​2nd International Scientific Conference – EMAN 2018 – Economics and Management: How to Cope With Disrupted Times, Ljubljana – Slovenia, March 22, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia; Faculty of Management Koper, Slovenia; Doba Business School – Maribor, Slovenia; Integrated Business Faculty –  Skopje, Macedonia; Faculty of Management – Zajecar, Serbia, ISBN 978-86-80194-11-0

Abstract​

Several published opinions consider economic growth as one of the conditions for economic freedom. At the same time, economic freedom is seen as a condition for the future growth of the economy. The Heritage Foundation, on the basis of the quantification of economic freedom, classifies countries as free – mostly free – moderately free – mostly unfree – repressed. It argues that in a group of countries classified as free, economic growth will be faster than in less-free economies. It can be assumed that the presented opinion is the result of empirical observations, according to which there is a positive relationship between the two characteristics.
Within the article, we analyse the possibility of generalizing the conclusion about the character and the closeness of the relation of the indicator of economic freedom with the indicators considered as a prerequisite for economic independence and the ability of self-development.
The first part examines the relationship between economic freedom and economic growth. We analyse the possibilities of using historical data on the economic freedom of the country to predict its economic growth. The objective is to obtain evidence to support the theory of the positive relationship between economic freedom and economic growth.
Subsequent verification of the nature and strength of the relationship between an economic freedom indicator and a set of factors of independence, development assumptions and resilience is based on the quantification of the degree of their dependence through correlation and regression analysis of economic freedom characteristics. The sources of the analysed data are Fraser Institute and The Heritage Foundation databanks, as well as Eurostat and World Bank data.
The results of the analysis reveal the differences in the closeness of the assessed economic variables with the indicator of economic freedom. The regression model concludes that economic freedom has no equally significant impact on economic growth in all groups of countries.
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Key words

economic freedom, economic growth, factors of economic freedom, fiscal freedom, investment freedom, trade freedom

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