The Reward for Freedom

I did a small study to understand how rank in the freedom index resonates with a countries economic might. I used GDP PPP as I believe it paints a fairer picture of the economy.

In short PPP is Purchase Power Parity and the numbers adjust for cost of essential commodities in a given country. For example, a basket of essentials that cost 100$ in China might cost 150$ in US. Giving a leverage to the Chinese in PPP calculation even though their nominal GDP might be lower than US’.

Here are the key takeaways.

1. Freedom and economy size has near 0 correlation in the top 10 GDP PPP ranks. For every High Freedom Index (HFI), a rank of less than 32 there is a country with Low Freedom Index (LFI), rank higher than 78.
2. Having said that not all Low Freedom Countries are rich. Infact Low freedom countries in top ranks such as Indonesia, China, India and Russia seems more like exceptions than the rule when taking into account the complete picture.
3. Meanwhile there is not even a single country that is high on HFI and low on economic strength.
4. The highest levels of freedom are in Western Europe, Northern Europe, and North America (Canada and the United States). The lowest levels are in the Middle East and North Africa, South Asia, and sub-Saharan Africa. Some of the poorest regions globally.
5. There is strong correlation between freedom given to citizens and economic strength of a region.
6. GDP PPP per capita shatters the mix of LFI and HFI countries in top ranks. China which has the highest PPP GDP globally has a mere 6500 $ (app. 1990–2017 average) compared to 57,500 $ for the US.
7. Countries in the top quartile of freedom enjoy a significantly higher per capita income ($30,006) than those in other quartiles; the per capita income in the least-free quartile is $2,615. The HFI finds a strong correlation between human freedom and democracy.

Human Freedom Index 2017. Lighter the shade, lower the freedom.

In conclusion democracy, levels of freedom and economic prosperity (GDP PPP per capita) has unmistakable and strong correlations (with a possible exception of Hong Kong). Countries that invest heavily on democracy reaps reward in the form of stronger economic growth and an even more prosperous region and a better World.

Here is to more freedom.

The author is a digital marketer who works with small companies. Author loves economics, reading and speaking in the third person to boost his ego.

You may contact him at tijosdesk@gmail.com and tweet and clap 👏👏if you enjoyed reading this.