International Journal of Business and Economics Research

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The Impact of Economic Freedom on Economic Growth

Received: 14 November 2019    Accepted: 12 December 2019    Published: 24 December 2019
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Abstract

This study investigated the relationship between economic growth and economic freedom. Fourty two countries were covered for the period 1996- 2017. The dependent variable is the real GDP per capita and the independent variables are; the index of economic freedom, real fixed capital formation, real government spending and average number of hours worked. The sources of data is the World Bank Group (WBG) and the Center for Growth and Development (GGDC). The sample of 42 countries was divided into two groups, based on the score of the country on the index of economic freedom for 2017. While the economic freedom index, which ranges from 100 to 70, has 13 countries. The second group having 69.9 to 50 points, consisted of 29 countries. The data was subjected to cross sectional panel analysis; the unit root indicated that all variables in the two groups were stable at the level, and The Pedroni Residual Co-integration Test showed that there was no co-integration between the variables. The normal least squares method was applied for each group of countries. The results of the analysis showed that the fixed effects model (Fixed Effect) was the appropriate model for data analysis. The study showed that there was a positive and statistically significant relationship between the economic freedom index and the real GDP per capita. In addition, the relationship was positive and statistically significant between real GDP per capita, and both fixed capital formation and government expenditure. The study recommended that more attention should be directed to the factors that have an impact on economic freedom, as these factors might have a positive impact on economic growth.

DOI 10.11648/j.ijber.20190806.27
Published in International Journal of Business and Economics Research (Volume 8, Issue 6, December 2019)
Page(s) 469-477
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Economic Freedom, Economic Growth, Real GDP Per Capita, Fixed Capital Formation, Working Hours, Government Spending

References
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[17] Patricia, NkiruandIzuchukwu, Daniel.(2013),"Impact of Government Expenditure on Economic Growth in Nigeria". Vol.1, No. 4, pp. 64-71, December 2013 International Journal of Business and Management Review Published by European Centre for Research Training and Development UK (www.ea-journals.org).
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[20] Rasheed, Cleaver (2013),“Theoretical Study on Economic Growth and Sustainable Development Relations and Links, Heritage Magazine”, No. 10, December 2013.
[21] Ricardo, David. (1817),“On the Principles of Political Economy and Taxation. Piero Sraffa (Ed.) Works and Correspondence of David Ricardo”, Volume I, Cambridge University Press (reprinted 1951).
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Author Information
  • Insurance Directorate, School of Business, University of Jordan, Amman, Jordan

  • Department of Business Economics, School of Business, University of Jordan, Amman, Jordan

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  • APA Style

    Fayrouz Al–Katout, Amir Bakir. (2019). The Impact of Economic Freedom on Economic Growth. International Journal of Business and Economics Research, 8(6), 469-477. https://doi.org/10.11648/j.ijber.20190806.27

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    ACS Style

    Fayrouz Al–Katout; Amir Bakir. The Impact of Economic Freedom on Economic Growth. Int. J. Bus. Econ. Res. 2019, 8(6), 469-477. doi: 10.11648/j.ijber.20190806.27

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    AMA Style

    Fayrouz Al–Katout, Amir Bakir. The Impact of Economic Freedom on Economic Growth. Int J Bus Econ Res. 2019;8(6):469-477. doi: 10.11648/j.ijber.20190806.27

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  • @article{10.11648/j.ijber.20190806.27,
      author = {Fayrouz Al–Katout and Amir Bakir},
      title = {The Impact of Economic Freedom on Economic Growth},
      journal = {International Journal of Business and Economics Research},
      volume = {8},
      number = {6},
      pages = {469-477},
      doi = {10.11648/j.ijber.20190806.27},
      url = {https://doi.org/10.11648/j.ijber.20190806.27},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijber.20190806.27},
      abstract = {This study investigated the relationship between economic growth and economic freedom. Fourty two countries were covered for the period 1996- 2017. The dependent variable is the real GDP per capita and the independent variables are; the index of economic freedom, real fixed capital formation, real government spending and average number of hours worked. The sources of data is the World Bank Group (WBG) and the Center for Growth and Development (GGDC). The sample of 42 countries was divided into two groups, based on the score of the country on the index of economic freedom for 2017. While the economic freedom index, which ranges from 100 to 70, has 13 countries. The second group having 69.9 to 50 points, consisted of 29 countries. The data was subjected to cross sectional panel analysis; the unit root indicated that all variables in the two groups were stable at the level, and The Pedroni Residual Co-integration Test showed that there was no co-integration between the variables. The normal least squares method was applied for each group of countries. The results of the analysis showed that the fixed effects model (Fixed Effect) was the appropriate model for data analysis. The study showed that there was a positive and statistically significant relationship between the economic freedom index and the real GDP per capita. In addition, the relationship was positive and statistically significant between real GDP per capita, and both fixed capital formation and government expenditure. The study recommended that more attention should be directed to the factors that have an impact on economic freedom, as these factors might have a positive impact on economic growth.},
     year = {2019}
    }
    

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  • TY  - JOUR
    T1  - The Impact of Economic Freedom on Economic Growth
    AU  - Fayrouz Al–Katout
    AU  - Amir Bakir
    Y1  - 2019/12/24
    PY  - 2019
    N1  - https://doi.org/10.11648/j.ijber.20190806.27
    DO  - 10.11648/j.ijber.20190806.27
    T2  - International Journal of Business and Economics Research
    JF  - International Journal of Business and Economics Research
    JO  - International Journal of Business and Economics Research
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    PB  - Science Publishing Group
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    UR  - https://doi.org/10.11648/j.ijber.20190806.27
    AB  - This study investigated the relationship between economic growth and economic freedom. Fourty two countries were covered for the period 1996- 2017. The dependent variable is the real GDP per capita and the independent variables are; the index of economic freedom, real fixed capital formation, real government spending and average number of hours worked. The sources of data is the World Bank Group (WBG) and the Center for Growth and Development (GGDC). The sample of 42 countries was divided into two groups, based on the score of the country on the index of economic freedom for 2017. While the economic freedom index, which ranges from 100 to 70, has 13 countries. The second group having 69.9 to 50 points, consisted of 29 countries. The data was subjected to cross sectional panel analysis; the unit root indicated that all variables in the two groups were stable at the level, and The Pedroni Residual Co-integration Test showed that there was no co-integration between the variables. The normal least squares method was applied for each group of countries. The results of the analysis showed that the fixed effects model (Fixed Effect) was the appropriate model for data analysis. The study showed that there was a positive and statistically significant relationship between the economic freedom index and the real GDP per capita. In addition, the relationship was positive and statistically significant between real GDP per capita, and both fixed capital formation and government expenditure. The study recommended that more attention should be directed to the factors that have an impact on economic freedom, as these factors might have a positive impact on economic growth.
    VL  - 8
    IS  - 6
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