Economic Freedom & Wealth

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Economic Freedom and Wealth Economic freedom is the ability for an individual to prosper with minimal intervention from government. In an economically free society, individuals are empowered to succeed or fail based on their own individual abilities. Higher levels of economic freedom lead to higher levels of economic growth and income. The level of economic freedom varies among different regions and countries across the globe. Thus, levels of prosperity and wealth also vary widely across the globe. The Heritage Foundation, in cooperation with The Wall Street Journal, researches several factors to measure economic freedom across the globe. The Foundation issues the results of their research in the Index of Economic Freedom. The Foundation …show more content…

Economic efficiency and growth is impeded by these restrictions. Countries like the US and Canada whose tariff rates are very low enjoy greater economic freedom and production according to comparative advantage. On the other hand, countries with many trade restrictions have slow economic growth and wealth creation.
Government Spending and Interference Government’s role in a free economy is one of support and protection. Governments have had a long history of imposing constraints on economic activities. Government spending as a percentage of GDP is one measure of the impact of government spending on the economic freedom of the country. Hong Kong, which ranks number one on the Index, has total government expenditures of 18.6% of GDP. In comparison Cuba, ranked near the bottom of the Index at 177, has total government expenditures equaling 78.1% of GDP. This reflects the continued government dominance of Cuba’s economy. Government spending reduces the resources available for private-sector use. The higher the government spending within the country, the higher the opportunity cost of these lost resources. “In addition, governments, because they operate outside of market constraints and competition, are typically susceptible to excessive bureaucracy, corruption, and waste” (Miller, 2011). Countries that were able to reduce government spending over the last couple of years experienced economic growth as

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