Economic Freedom

This paper uses the index published in Economic Freedom of North America (Karabegović and McMahon, 2008) to examine the impact of the relationship between resource dependence and institutional quality on economic development in US states. Studies have shown that resources can indeed crowd out such factors as investment, education, and the economy's efforts at industrialization, a situation now known as Dutch Disease, named after the experience of the Netherlands when the discovery of natural-gas fields led to a decline of the manufacturing sector.

This paper explores the question of whether mineral resource wealth is an economic blessing or curse, particularly for developing nations where growth and reduction of poverty are vital. It does this by examining the relationship between natural resources and economic growth and the interaction between institutions and natural resources.

Economic freedom is based on the cornerstones of personal choice, voluntary exchange, freedom to compete, and security of private property. Research shows that individuals living in countries with high levels of economic freedom enjoy higher levels of prosperity.