Economic Freedom

This is the fifth edition of Economic Freedom of the World . Chapter 1 of this report updates the data from the earlier editions and presents an economic freedom index for 123 countries for 1999. Exhibit 1-1 shows the 21 components used to construct the index.

In the Middle Ages up to 90 percent of the wealth of Europe came from the owning of land. As a result, the law of the times developed elaborate definitions of and protections for property rights in land. Today, we live in an economy deriving ever more of its income from technological advances based on research and human ingenuity. Modern capitalism's increasing dependence on intellectual property has allowed for qualitatively higher levels of efficiency, productivity, and quality of life. Accordingly, the Intellectual Property Rights (IPRs) embedded in patents, trademarks, and copyrights have received increasing attention. The rise of global trade has further broadened the discussion of IPRs from a largely domestic to an international stage.

In its simplest form, economic freedom involves the freedom to make choices, freedom of exchange, and protection of private property. Any major impediment to the exercise of these rights as a result of intervention by government is a violation of economic freedom. The freest of economies will operate with a minimal amount of government interference, relying upon personal choice and markets.