However, big government does not always mean hostility toward business. Hong Kong, Singapore, and the United States had regulatory environments that were favorable for business competition and market allocation, but so too did big government countries like Finland, Netherlands, Denmark, and Sweden. Modern economic growth is primarily about discovery, innovation, and brain power. Economic freedom leads to greater prosperity One of the most compelling results of the study is the relationship between economic freedom and prosperity. As economic freedom declined, so did the average per capita GDP, as well as the average growth rate.
Free economies have higher per person incomes and grow more rapidly.
They also have less poverty and political corruption, achieve higher scores on the United Nations Human Development Index, and their citizens live 21 years longer. This fifth edition of Economic Freedom of the World updates data from the earlier editions and presents an economic freedom index for the 123 countries ranked. These variables attempt to quantify the restrictions on economic freedom imposed by governments in a variety of areas. Principal component analysis was used to attach weights to the component data which ultimately combine to create a summary rating. Survey data was used to supplement the components of the main index to develop a more comprehensive index of economic freedom in 58 countries and integrates regulatory factors that are difficult to quantify objectively.