Freedom, Democracy, and Human Development
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This is consistent with my research on economic freedom and development. But then what about democratic freedom?Are the world's impoverished masses destined to live lives of permanent misery unless rich countries transfer wealth for spending on education and infrastructure?
You might think so if your gurus on development economics earn their bread and butter "lending" at the World Bank. Education and infrastructure "investment" are two of the Bank's favorite development themes.
Yet the evidence is piling up that neither government nor multilateral spending on education and infrastructure are key to development. To move out of poverty, countries instead need fast growth; and to get that they need to unleash the animal spirits of entrepreneurs.
Empirical support for this view is presented again this year in The Heritage Foundation/The Wall Street Journal Index of Economic Freedom, released today [see the article for the country-by-country index]. In its 14th edition, the annual survey grades countries on a combination of factors including property rights protection, tax rates, government intervention in the economy, monetary, fiscal and trade policy, and business freedom.
….The Index also reports that the freest 20% of the world's economies have twice the per capita income of those in the second quintile and five times that of the least-free 20%. In other words, freedom and prosperity are highly correlated.
See my plot below, which clearly shows the strong relationship between democratic freedom and the year 2000 economic freedom index (source is here).
The problem here is in focusing on economic freedom and not taking into account overall measures of a people's welfare and impoverishment, such as their infant mortality rate, life expectancy, secondary school enrolment, overall education, literacy, poverty, disparity in incomes, health, and so on. The UN has done this with their Human Development Index (HDI), and Human Poverty Index (HPI) for all countries. All such measures of a people's welfare are highly intercorrelated and form an empirical dimension that goes well beyond the economic freedom index in quantifying a people's impoverishment. Then how do HDI and HPI correlate with democratic freedom? You can see the close relationship in thee following table, which also shows that such freedom helps provide a people security from violence
Thus, democratic freedom is highly related to economic freedom, and the overall welfare of a people. Want to help end impoverishment and violence, then promote democracy. Better then just flooding a poor country with money, much of which goes into the pockets of the ruling gang.
