On the foreign direct investment–economic growth relationship in Africa: does economic freedom mediate this relationship?

PurposeIn this study, the authors examine how economic freedom mediates the impact of foreign direct investment (FDI) on economic growth in Africa.Design/methodology/approachBy using data from 41 countries over the period 2000–2017, the authors invoke Seo and Shin's (2016) sample splitting approach while relying on the recently developed Seo et al.'s (2019) computationally robust bootstrap algorithm to achieve the purpose of this study.FindingsThe authors find evidence of economic freedom threshold that bifurcates the link between FDI and economic growth in Africa. More precisely, FDI does not improve overall economic growth for African countries whose economic freedom index is below the estimated threshold while significantly spurring growth for African countries with economic freedom above this threshold.Practical implicationsAfrican countries need to strive towards improving their level of economic freedom through the strengthening of rule of law, reducing government size, promoting regulatory efficiency and further opening of the goods and capital markets.Originality/valueThe association between FDI and economic growth has been well documented. While the positive theoretical postulations are almost conclusive, empirical literature on the precise effect of FDI remains contentious and far from being settled. What is missing in the existing literature in Africa is whether countries' level of economic freedom mediates how FDI explains the variations in economic growth across African countries. The authors fill this research gap.

New evidence on the link between ethnic fractionalization and economic freedom

Among the determinants of economic freedom, the presence of different ethnic groups within a country has sometimes been explored by the empirical literature, without conclusive evidence on the sign of the relation, its drivers, and the conditions under which it holds. This paper offers new evidence by empirically modelling how ethnic fragmentation is related to economic freedom, as measured by the Economic Freedom Index and by each of its numerous areas, components and sub-components. The results provide insights on the components driving the effect and, interestingly, detect notable differences between developed and developing countries.

Analysis of Eurasian Countries in Terms of Economic Freedom with Cluster Analysis

Governments in economically free societies; aim to increase the level of sustainable growth and prosperity of the country while allowing labor, capital, and products to move freely. To determine the economic freedom of the countries, it publishes indices by various independent institutions, and thus, their position in comparison to other countries is determined. Especially ın order to determine the group structure among countries that are close to each other in terms of regions; In addition to revealing the status of the region in terms of economic freedom, it is beneficial in terms of acting with similar countries for plans and determining policies. In the index called the Economic Freedom Index published annually by the Heritage Foundation, a ranking including the countries that are members of the United Nations is made. This index value is measured through variables based on 12 quantitative and qualitative factors divided into four broad categories of economic freedom. In this study in which 2021 data was used, cluster analysis, one of the multivariate statistical analysis techniques, was preferred to group countries. Findings from the analysis showed that Eurasian countries were divided into 4 different clusters according to the economic freedom index. Among the countries, the most striking country was North Korea. In the formation of this situation. It can be thought that it is due to the state's adoption of an excessively interventionist policy in the economic policies of the country.

EKONOMİK ÖZGÜRLÜK PERFORMANSI FAKTÖRLERİ ARASINDAKİ İLİŞKİ: DOĞRULAYICI FAKTÖR ANALİZİ İLE BİR UYGULAMA

There are various indexes in the international arena that measure the economic freedom performance of countries. Economic freedom performances of countries can be measured with these indexes. According to the indixes, countries can improve their economic freedom performance by carrying out activities that complement each other positively by the economic freedom factors. One of these indexes is the Heritage Institution Economic Freedom Index (HFEFI). In this context, the relations between the economic freedom dimensions of the HFEFI components of a total of 174 countries with complete data in the Heritage Institution Economic Freedom Index (HFEFI) report of 2020 were measured with the Confirmatory Factor Analysis. According to the findings, it was observed that the goodness of fit values of the created model were provided. Subsequently, the correlational density values between HFEFI dimensions were determined as regulatory efficiency, market openness, rule of law and goverment size, respectively. The contribution values of the dimensions to the relational structure are the rule of law (very high), market openness (high), goverment size (medium) and regulatory efficiency. Therefore, it has been concluded that the goverment size and regulatory efficiency structures of the countries should be engaged in activities that will link, concern and ensure each other and other dimensions.

Examining the Effects of Social and Economic Freedoms on the COVID-19 Pandemic

Background Since early 2020, the COVID-19 pandemic has dominated people’s lives around the globe and, even with the start of vaccination efforts in late 2020, the virus is likely to continue to affect global economies and individual routines long after the end of 2021. As a result, numerous pandemic-related analyses have been completed. However, few of these studies focus on the impact of pre-existing societal and economic factors that may have played a role in the spread of COVID-19. This study evaluated the impact of social and economic freedoms, gross domestic product, and population density in nations around the world on COVID-19 cases, deaths, testing and vaccination rates. Methods To explore the effects of social and economic freedoms, gross domestic product, and other parameters on the COVID-19 pandemic, multiple datasets, including the Economic Freedom Index and the Human Freedom Index were used, along with COVID-19 data, to examine both direct and indirect relationships. The K-Means clustering algorithm was used for many analyses. Results High economic and social freedoms were associated with increased numbers of COVID-19 cases and deaths throughout 2020. Countries within the highest category of economic freedoms reported their first COVID-19 case 44 days before and their first virus death 91 days before low-economic-freedom nations, on average. Countries with the highest overall freedoms exhibited average COVID-19-stringency scores of 4.4, 12.85, and 4.49 points less than countries in the lowest freedom categories for the Spring, Summer, and Fall of 2020, respectively, representing less strict pandemic responses. Despite these relationships, countries with higher overall freedoms had a lower average fatality rate of 2.03% compared with countries in the lower freedom categories of up to 2.98%. Freedoms were also shown to correlate with other pandemic-influencing factors, including GDP, political systems, and population density. Conclusion High economic and social freedoms were associated with increased numbers of COVID-19 cases and deaths throughout 2020. Future analyses should address whether the enjoyment of freedoms can be balanced with the preservation of safety to improve responses to future pandemics.

Impact of Economic Freedom on Corruption Revisited in ASEAN Countries: A Bayesian Hierarchical Mixed-Effects Analysis

Conceptual and applied studies assessing the linkage between economic freedom and corruption expect that economic freedom boosts economic growth, improves income, and reduces levels of corruption. However, most of them have concentrated on developed and developing groups, while Association of Southeast Asian Nations (ASEAN) countries have drawn much less attention. Empirical findings are most often conflicting. Moreover, previous studies performed rather simple frequentist techniques regressing one or some freedom indices on corruption that do not allow for grasping all the aspects of economic freedom as well as capturing variations across countries. The study aims to investigate the effects of ten components of economic freedom index on the level of corruption in ten ASEAN countries from 1999 to 2018. By applying a Bayesian hierarchical mixed-effects regression via a Monte Carlo technique combined with the Gibbs sampler, the obtained results suggest several findings as follows: (i) In view of probability, the predictors property rights, government integrity, tax burden, business freedom, labor freedom, and investment freedom have a strongly positive impact on the response perceived corruption index; (ii) Government spending, trade freedom, and financial freedom exert a strongly negative effect, while the influence of monetary freedom is ambiguous; (iii) There is an existence of not only random intercepts but also random coefficients at the country level impacting the model outcome. The empirical outcome could be of major importance for more efficient corruption controlling in emerging countries, including ASEAN nations.

Innovation Efforts of Small Businesses in Latin America

Purpose of the study: in this paper, we analyze the effects of institutional dynamics on innovation efforts of small businesses in Latin America. Methodology/approach: we use a survey sample of 11,446 small Latin American businesses from The World Bank; The survey comprised answered questions regarding their innovation efforts in the last three years: product innovation, process innovation, and investments in research and development; To assess the effect of institutional dynamics (reforms and reversals), data from the Economic Freedom Index were captured. Main results: we conclude that in small businesses in Latin American countries, innovation efforts may be more linked to the preparation to face an institutionally inefficient environment than to take advantage of the environments that have had an institutional improvement. Theoretical/methodological contributions: these small business movements may be more linked to the search for survival in an uncertain environment, contradicting the expected effects that there would be more innovation efforts when the environment was conducive to it. Relevance/originality: this study is valuable because it allows the analysis of what types of institutional dynamics can lead to what types of responses in innovation efforts of small businesses. Social/management contributions: the study also contributes by demonstrating whether the formulation of institutional reforms can impact small businesses in the Latin American context, thus being important for the development of public policies.

WHOSE ECONOMIC FREEDOM ANYWAY? REVELATIONS FROM THE SOUTH AFRICAN DISCOURSE

The Economic Freedom Index published by the Heritage Foundation ranks South Africa at 72nd out of 178 countries in terms of economic freedom in 2015. This index classifies South Africa as moderately free in terms of its level of economic freedom. While the country may be in the middle of the pack on the Economic Freedom Index, it is also often classified as one of the most unequal societies in the world. South Africa is often seen in the top five unequal countries globally with a high Gini-coefficient, and when using the Palma index (measuring the ratio of income share between the top 10 per cent and bottom 40 per cent), South Africa can also be classified as highly unequal. Therefore a contradiction seems to exist. While South Africa ranks as economicallymoderately free on one hand, the country is also regarded as one of the most unequal societies in the world, on the other hand. It is this contradiction that brings to the fore a contested ideological construction of economic freedom within its political narrative premised on a view that the promise of democracy had not delivered. This article presents a critical discourse analysis of the contested interpretations of economic freedom through the lens of securing liberation and the promise of democracy in South Africa: a promise built on the Freedom Charter's construction of a democratic South Africa.