Economic Freedom of North America: 2002 Annual Report

The index of the Economic Freedom of North America is an attempt to gauge the extent of the restrictions on economic freedom imposed by governments in North America. This study employs two indexes. The first is the subnational index, which measures the impact of provincial and municipal governments in Canada and state and local governments in the United States. The second index, called the all-government index, includes the impact of all levels of government - federal, provincial/state, and municipal/local - in Canada and the United States. All 10 provinces and 50 states are included in both indexes. Economic Freedom of North America employs nine variables in three areas: 1. Size of Government; 2. Takings and Discriminatory Taxation; and 3. Labor Market Freedom.

The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. The econometric testing presented in this paper shows that in North America economic freedom fosters prosperity and growth. Economic freedom increases the affluence of individuals. This finding is consistent with other studies of economic freedom.