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Poverty and economic freedom : evidence from cross-country data

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Title:Poverty and economic freedom : evidence from cross-country data
Authors:Hasan, Rana
Quibria, M.G.
Kim, Yangseon
LC Subject Headings:Free enterprise
Economic development
Economic indicators
Civil rights
show 1 morePolitical rights
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Date Issued:2003
Publisher:Honolulu: East-West Center
Series:East-West Center working papers. Economics series ; no. 60
Abstract:This paper explores the empirical relationship between poverty and economic freedom. In doing so, it estimates the levels of absolute poverty for a panel of over forty developing countries and then utilizes fixed effects and GMM-IV estimators to derive the empirical relationships. The principal empirical results that emerge from this exercise indicate that important indicators of economic freedom such as openness to trade and small size of the government are robustly associated with poverty reduction. Labor market flexibility, which reflects an important dimension of economic freedom, does not have a significant effect on poverty on average. However, there is some evidence that trade's beneficial impact on poverty has been smaller in economies with more regulated labor markets. Finally, civil liberties that encompass various types of important economic freedom such as property rights, rule of law, etc., also contribute significantly to poverty reduction. This result contrasts with that for political liberties, which have seemingly no impact on poverty reduction. All these suggest that economic freedom is as much important for economic growth as for poverty reduction.
Description:For more about the East-West Center, see
Pages/Duration:32, [8] pages
Appears in Collections: Economics [Working Papers]

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