EMPIRICAL APPROACH OF THE ESTIMATION OF THE EFFECTS OF ECONOMIC FREEDOM ON ECONOMIC GROWTH IN WESTERN BALKANS
Keywords:
Economic growth, Economic freedom, Fixed effects, Random effects, developing countriesAbstract
Nowadays, economic freedom it is seen as a catalyst for enhancing economic growth, which de facto will
return to produce even more economic freedom in the economy. Certainly, there is no doubt about the significant
direct and indirect effect of the economic freedom on the growth of both developed and developing countries, where
empirical evidence claims a strong positive association among these two variables.
Thus, having into consideration the emphasizes of the research of this nexus in the past decade and the highlighted
importance of the economic freedom in enhancing the economic growth, a panel of total 6 countries in the region of
Western Balkans, for the time -period 2000 – 2022 has been conducted. In this regard, several techniques have been
used, such as Ordinary Least Square, Fixed effects and Random effects model. Finally, the results reveal that there
exists a strong negative association between economic freedom index and GDP per capita in these countries in the
countries of Western Balkans, for the last two decades.
References
Ayal, E. B., & Karras, G. (1998). Components of economic freedom and growth: An empirical study. The Journal of Developing Areas 32: 327–38.
Bayar, Y. (2016). Impact of openness and economic freedom on economic growth in the transitional economies of European Union. South-Eastern Europe Journal of Economics 14: 7–19.
Bennett, D.L. (2016). Subnational Economic Freedom and Performance in the United States and Canada. Cato Journal 36: 165–85.
Bergh, A., & Bjørnskov, C. (2021). "Does economic freedom boost growth for everyone?," Kyklos, Wiley Blackwell, vol. 74(2), pages 170-186, May.
Brkić, I., Gradojević, N., & Ignjatijević, S. (2020). "The Impact of Economic Freedom on Economic Growth? New European Dynamic Panel Evidence" Journal of Risk and Financial Management 13, no. 2: 26. https://doi.org/10.3390/jrfm13020026
De Haan, J., & Sturm, J.-E. (2000). On the relationship between economic freedom and economic growth. European Journal of Political Economy 16: 215–41. [CrossRef] De Haan, Jakob, Susanna Lundstrom, and Jan-Egbert Sturm. 2006. Market-oriented institutions and policies and economic growth: A critical survey. Journal of Economic Surveys 20: 157–91
De Haan, J., & Sturm, J.-E. (2000). On the relationship between economic freedom and economic growth. European Journal of Political Economy 16: 215–41.
Fraser Institute Annual Report. (2021). https://www.fraserinstitute.org/studies/economic-freedom-of-the-world-2021-annual-report
Gwartney, J.D., Lawson, R., & Hall, J. (2017). Economic Freedom of the World: 2017 Annual Report. Vancouver: the Fraser Institute.
Haydaroglu, C. (2016). The Effect of Foreign Direct Investment and Economic Freedom on Economic Growth: The Case of BRICS Countries. Research in World Economy 7: 1–10.
Heckelman, J.C. (2000). Economic freedom and economic growth: A short-run causal investigation. Journal of Applied Economics 3: 71–91.
Islam, S. (1996). Economic freedom, per capita income and economic growth. Applied Economics Letters 3: 595–97.
Nadeem, M. ., Jun, Y. ., Akhtar, T. ., Dong, W. ., & Niazi, M. . (2019). Does Really Economic Freedom Matter for Growth in South Asia? Empirical Evidences from Pre-Economic Crises and Post-Economic Crises Period. Asian Economic and Financial Review, 9(1), 52–63. https://doi.org/10.18488/journal.aefr.2019.91.52.63
Pääkkönen, J. (2010). Economic freedom as driver of growth in transition. Economic Systems 34: 469–79.
Türedi, S. (2013). The Effect of Economic Freedom on Economic Growth: A Panel Data Analysis for 12 Islamic Countries. International Research Journal of Finance and Economics 107: 154–62.
Wu, C. (2011). Economic freedom, economic growth, and China. Chinese Economy 44: 104–19.
Zhang, F., Hall, J., & Feng, Y. (2018). “Does Economic Freedom Affect the Production Frontier? A Semiparametric Approach with Panel Data.” Economic Inquiry 56(2): 1380-1395.
