Economic Freedom of The World 2000

See Michael Walker (ed.), Freedom, Democracy, and Economic Welfare (Vancouver: The Fraser Institute, 1988); Walter Block (ed.), Economic Freedom: Toward a Theory of Measurement (Vancouver: The Fraser Institute, 1991); Stephen Easton and Michael Walker (eds.), Rating Global Economic Freedom (Vancouver: The Fraser Institute, 1992); James Gwartney, Robert Lawson and Walter Block, Economic Freedom of the World: 1975-1995 (Vancouver: The Fraser Institute, 1996); James Gwartney and Robert Lawson, Economic Freedom of the World: 1997 Report (Vancouver: The Fraser Institute, 1997); and James Gwartney and Robert Lawson, Economic Freedom of the World: 1998/1999 Interim Report (Vancouver: The Fraser Institute, 1998). These publications provide the foundation for this work.

One component (freedom to convert domestic currency to foreign currencies in order to engage in current and capital account transactions) was dropped from the index because the representatives from the network expressed concern about its reliability. The black-market exchange rate variable was moved from Area VI to Area IV. Also, two variables (freedom to hold foreign currency bank accounts abroad and domestically) were combined into one component. Area V has been rescaled for all years in order to control for an upward drift in the data that did not reflect real changes in the institutional arrangements.

These weights, with the exception of those used in Area VI, have not changed from what they were in Economic Freedom of the World: 1998/1999 Interim Report. Weights used in Area VI had to be recalculated because the black-market exchange rate variable was moved from Area VI to Area IV. Area IV was left with two components after the currency-convertibility component was dropped, the two foreign-currency bank account components were combined, and the black-market exchange rate component was added. Principal component analysis assigns equal weights (e.g., 50%) when there are just two components.

The data for the latest year are primarily 1997. In some cases, 1998 data were used and, in a few cases, 1996 data.