The Impact of Economic Freedom on Economic Growth
International Journal of Business and Economics Research
Volume 8, Issue 6, December 2019, Pages: 469-477
Received: Nov. 14, 2019; Accepted: Dec. 12, 2019; Published: Dec. 24, 2019
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Authors
Fayrouz Al–Katout, Insurance Directorate, School of Business, University of Jordan, Amman, Jordan
Amir Bakir, Department of Business Economics, School of Business, University of Jordan, Amman, Jordan
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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.
Keywords
Economic Freedom, Economic Growth, Real GDP Per Capita, Fixed Capital Formation, Working Hours, Government Spending
To cite this article
Fayrouz Al–Katout, Amir Bakir, The Impact of Economic Freedom on Economic Growth, International Journal of Business and Economics Research. Vol. 8, No. 6, 2019, pp. 469-477. doi: 10.11648/j.ijber.20190806.27
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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