Government control and public ownership of economic assets tend to coincide: - strong intervention + high ownership (“command economies”) - weak intervention + low ownership (“market economies“)
The Relationship Between Political Systems and Economic Systems Market economy. Market forces — the interaction of supply and demand — determine prices; limited government intervention. Command (=centrally planned) economy . Makes the state a dominant force in the production and distribution of goods and services. Mixed economy . Exhibits the features of both a market economy and a command economy, combining state intervention and market mechanisms for achieving production and distribution.
2016 Index of Economic Freedom Source: Heritage Foundation and Wall Street Journal Ranking of 186 countries. Covers 10 freedoms: from property rights to entrepreneurship “…the 2016 Index confirms the formidable positive relationship between economic freedom and progress .” Economies rated ‘free’ or ‘mostly free’ enjoy incomes that are over twice the average in all other countries and more than four times higher than the average incomes of ‘repressed’ economies
The 10 Economic Freedoms Rule of Law Property rights is an assessment of the ability of individuals to accumulate private property, secured by clear laws that are fully enforced by the state. Freedom from Corruption (TI index) Limited government Fiscal freedom is a measure of the tax burden imposed by the government Government size is the level of government expenditure as a percentage of GDP Regulatory efficiency Business freedom is a quantitative measure of the ability to start, operate, and close a business Monetary freedom combines a measure of price stability with an assessment of price controls Financial freedom is a measure of banking security as well as a measure of independence from government control Labour freedom component assesses the legal and regulatory framework of a country’s labour market. Open markets Trade freedom is a composite measure of the absence of tariff and non-tariff barriers Investment freedom assesses policies toward the free flow of investment capital Source: The Heritage Foundation
2016 Index of Economic Freedom World Rankings: Top 10 Countries
Rank Country Score 11 United States 75.4 14 Taiwan 74.7 16 Netherlands 74.6 17 Germany 74.4 22 Japan 73.1 29 Malaysia 71.5 30 Botswana 71.1 35 Israel 70.7 43 Spain 68.5 67 Thailand 63.9 86 Italy 61.2 122 Brazil 56.5 123 India 56.2 125 Egypt 56 144 China 52 153 Russia 50.6 2016 Index of Economic Freedom: Other significant countries
Index of Economic Freedom: Country Breakdown (2016)
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