Economic Freedom
GB 540 Economics for Global Decision Makers
Prof. Timothy Terrell Nhut (Andy) Diep

2010

GB540 Economic Freedom and Variations in Wealth Among Countries. 2

Introduction
The Index for Economic Freedom published by the Heritage Foundation and the Wall Street Journal (http://www.heritage.org/Index/) shows a clear correlation between economic freedom and country’s economic wealth. From a long list of countries around the world, viewer should see an almost perfect correlation why countries like Cuba, North Korea, Venezuela, or China is at the bottom of the list. Did the fall of the Soviet Union teach anyone anything? Just imagine if China does not open to economic reform, how it can survive with over 1.3 billion people. In fact, throughout our long history, including the failure of the Soviet Union, there is no doubt the free economies will outshine the less free ones. The Index shows the overwhelming evidence that countries like the United States, Japan, Canada, or England that have the most economic freedom have better standards of living, while socialist or communist countries have the least economic freedom tend to have the lowest. In fact, country like the United States generated unparalleled ability to produce wealth, raise the general standard of living, and provide goods and services in a society. Careful study of the long list of countries, and analyze each government system, viewer should see a trend that when too much government intrusion hinders the economic progress that occur every day and will ultimately lead to economic slowdown. “If a government limits its involvement in economic activity, so as to maximize opportunities for individuals to reach their full economic potential, then it will be on a path leading to the greatest levels of prosperity and human well-being for society as a whole” (Miller, Holmes, Kim, 2009). With the