Economic Freedom Perspectives of Economic Progress in India: An Exploratory Analysis
Author : Dr. R Karthikeyan and Dr. M Karuppiah
Abstract :
There is no doubt that economic freedom has had popular proponents for many years, with F.A Hayek’s Road to Serfdom, and Milton Friedman’s Capitalism and Freedom, the broader concepts of freedom were espoused with great clarity to millions of readers, but this was not largely reflected in the professional economic journals. Economic freedom, buttressed by the rule of law, fiscal responsibility, market openness, and sound regulatory environments, remains the surest pathway to resilience and prosperity. The present paper tries to explore the link between Economic Freedom and Economic Growth in India at macro level and specifically to analyse the spheres of Economic Freedom viz, extent of freedom in Rule of Law, Govt. Size, Regulatory Efficiency and Open Market; the relationship between the level of Economic Freedom and Human Development and Incidence of Poverty. For analytical convenience, the Overall Economic Freedom Index was conceived by using the specific freedoms, viz, Business Trade Freedom, Fiscal Freedom, Government size, Monetary Freedom, Investment freedom, Financial Freedom, Property Rights, and Freedom from corruption and Labour Freedom was considered. This index serves as a valuable tool for cross country and regional comparisons. It provides a framework for understanding the institutions that are correlated to greater prosperity. It is useful to view over time and provides insight into the general trend of growth or well-being that we can expect a nation to experience due to an institutional or policy change. The most fundamental benefit of economic freedom stems from its strong positive relationship to levels of per capita income. Improvements in economic freedom are a vital determinant of rates of economic expansion that the record shows reduction in poverty. Undeniably, the greater economic freedom ensures for higher growth rates of GNP, per capita GNP, HDI and reduction in poverty over time. Increasing economic freedom is unequivocally about achieving greater overall prosperity that includes but also goes beyond the materialistic and monetary dimensions of well-being. It is also observed that vibrant and lasting economic growth is most likely to occur when governments implement policies that enhance economic freedom and empower individuals with greater choice and more opportunities. Advancing economic freedom is a proven policy for dynamic economic expansion and is likely to be the surest path to true progress for the greatest number of people.
Keywords :
Economic Freedom Index, Freedom in Rule of Law, Government Size, Regulatory Efficiency, Open Market, Fiscal Freedom, Monetary Freedom, Property Rights, GNI, HDI.
