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Brazils limited experiment with market-oriented reforms has been uneven and even derailed in some areas. The states presence in such sectors as energy, financial services, and electricity remains extensive. The legacy of decades of central planning, state meddling in economic activity continues even where it has demonstrably failed, and the weak rule of law further undermines economic progress.

The onerous regulatory environment hinders needed economic transformation and undercuts realization of the economys full potential. Growing public debt and higher debt service costs have kept fiscal pressure high, and burdensome taxes further crowd out private-sector growth.

President Dilma Rousseff of the leftist Workers Party began her second term in January 2015. A recession, fiscal and monetary belt-tightening, and a far-reaching kickback scheme involving her party and the state-controlled Petrleo Brasileiro oil company sent her approval rating plummeting. Brazil has poor public services, antiquated and insufficient infrastructure, and high tax rates. In recent years, inflation has surged again. Growth is sluggish, but Brazils Bolsa Famlia conditional cash transfer program for the poor has won support in some sectors. Brazil is the worlds seventh-largest economy, and its population of almost 200 million is heavily concentrated on the Atlantic coast. Since the advent of the monetary real plan in the 1990s and the end of hyperinflation, the poverty rate has dropped, but heavy government intervention in the economy continues to limit development.

Graft remains endemic, and Brazilians disapprove of President Dilma Rousseffs policies on corruption and crime. In 2014, a former director of state-owned Petrobas accused more than 40 politicians, including one minister and three governors, in a massive kickback investigation. Brazils judiciary is inefficient and subject to political and economic influence. The court system is overburdened, and contract disputes can be lengthy and complex.

The income tax rate is 27.5 percent. The standard corporate tax rate is 15 percent, but a financial transactions tax, 10 percent surtax, and 9 percent social contribution on net profits bring the effective rate to 34 percent. The overall tax burden amounts to 33.4 percent of GDP. Public spending equals over one-third of GDP, and fiscal stimulus efforts have increased chronic deficits. Public debt equals about 65 percent of GDP.

Bureaucratic hurdles remain common, including lengthy processes for launching a business and obtaining permits. The non-salary cost of employing a worker adds to the cost of doing business, and labor regulations remain stringent. In 2015, surging state-administered prices for gasoline, electricity, and transportall heavily subsidized before the 2014 presidential electioncaused inflation to reach its highest level in over a decade.

Brazils average tariff rate is 7.8 percent. Brazilians may not import used consumer goods like cars and clothing. Government procurement policies favor domestic companies. Foreign investment in agricultural land is restricted. Brazil has the regions largest financial services market. The states role in credit markets has grown since 2008, and public banks now account for over 50 percent of loans to the private sector.

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Index of Economic Freedom - The Heritage Foundation

Peer-Reviewed Papers (published in academic journals):

1994|1996|1997|1998|1999|2000|2001|2002

2003|2004|2005|2006|2007 |2008 |2009 |2010 |2011

Other Papers Related to Economic Freedom: 1998-2007

If you know of any other papers current or forthcoming that should be included on this page, or have further information about any of these papers or authors, please write to freetheworld*at*fraserinstitute.org.

de Vanssay, X. and Z. A. Spindler (1994). Freedom and Growth: Do Constitutions Matter. Public Choice. 78, 3-4: 359-372.

This paper empirically investigates whether certain constitutional enumerations matter for economic growth. We find that negative (positive) rights tend to have a positive (negative) effect on economic growth, and that structural constraints have a more significant and larger effect than procedural constraints.

Uses the 'Scully and Slottje' Index as an independent variable. (See: Scully, GW and Slottje, D, (1991) "Ranking Economic Liberty Across Countries" Public Choice 69, pp. 151-2). The model estimates the steady-state solution of an (institutionally) augmented Solow growth model. The dependent variable is the logarithm of per-capita income. This is a cross-section analysis covering 100 countries.

de Vanssay, X. and Z. A. Spindler (1996). Constitutions, Institutions and Economic Convergence: An International Comparison. Journal for Studies in Economics and Econometrics. 20, 3 (November): 1-19.

Abstract: This paper explores empirically whether constitutional enumerations and economic freedom indexes affect economic convergence. Some constitutional features and economic freedom do affect convergence, though economic freedom is by far the more influential.

Uses the 'Scully and Slottje' Index as an independent variable. (See: Scully, GW and Slottje, D, (1991) "Ranking Economic Liberty Across Countries" Public Choice 69, pp. 151-2). The dependent variable is the average annual per capita growth rate. This is a cross-section analysis covering 109 countries.

Islam, Sadequil (1996). Economic Freedom, per Capita Income and Economic Growth. Applied Economics Letters 3: 595-97.

Examines the effect of economic freedom on income and growth in high-, middle-, and low-income country sets and finds that economic freedom is significant for a sample of all countries but only in some subsets.

Uses the precursor to Economic Freedom of the World, Measuring Economic Freedom, by James Gwartney, Walter Block and Robert Lawson, a chapter in Stephen Easton and Michael Walker (eds.), Rating Global Economic Freedom (Vancouver: The Fraser Institute, 1992). Measuring Economic Freedom is the main data source for institutional variables.

Paul, C.W.; Souder, W.E.; Schoening, N.C. (November 1996). The influence of government policies on innovation and technological advance. Journal of Scientific and Industrial Research of India. 55 (11): 851-859.

Petersmann, E.U. (June 1996). International competition rules for governments and for private business - The case for linking future WTO negotiations on investment, competition and environmental rules to reforms of anti-dumping laws. Journal of World Trade. 30 (3): 5-35.

Ali, Abdiweli M. (1997). Economic Freedom, Democracy and Growth. Journal of Private Enterprise 13 (Fall): 1-20.

This paper takes advantage of newly constructed measures of economic freedom to show the importance of economic freedom on growth. I find that economic freedom is a more robust determinant of growth than political freedom and civil liberty.

Uses summary ratings from Economic Freedom of the World: 1975-1995 as one variable in a comparison of a number of institutional variables.

Anwar, S.T. (1997). Economic freedom of the world: 1975-1995. Journal of International Business Studies. 28 (4): 872-878.

Dornbusch, R. (1997). Brazil's incomplete stabilization and reform. Brookings Papers on Economic Accountability. (1): 367-404.

Easton, Steven T., and Michael A. Walker (1997). Income, Growth, and Economic Freedom. American Economic Review 87 (2) (May): 328-32.

Finds that economic freedom is an important explanatory variable for steady-state levels of income. The addition of a variable for economic freedom is also shown to increase the explanatory power of a neo-classical growth model.

Economic Freedom of the World: 1975-1995 is the main data source for institutional variables.

Goldsmith, Arthur A. (1997). Economic Rights and Government in Developing Countries: Cross-National Evidence on Growth and Development. Studies in Comparative International Development 32 (2) (summer): 29-44.

The paper finds that developing countries that score better in protecting economic rights also tend to grow faster and to score higher in human development. In addition [the paper finds that] economic rights are associated with democratic government and with higher levels of average national income.

Uses summary ratings from Economic Freedom of the World: 1975-1995 as one of a number of institutional variables.

Hakura, F.S. (April 1997). The Euro-Mediterranean policy: The implications of the Barcelona Declaration. Common Market Law Review. 34 (2): 337-366.

Hanke, Steve H., and Stephen J.K. Walters (1997). Economic Freedom, Prosperity, and Equality: A Survey. Cato Journal 17 (2) (Fall): 117-46.

The article compares several institutional indexes for content and explanatory power: Gerald Scully's studies, The Fraser Institute's Economic Freedom of the World, Freedom House's Economic Freedom Indicators, The Heritage Foundation's Indices of Economic Freedom, The International Institute for Management Development's World Competitiveness Yearbook 1996, The World Forum's Global Competitiveness Report 1996. Compares liberty and prosperity, equality and foreign policy implications. They find that economic freedom is positively correlated with per-capita GNP.

Economic Freedom of the World: 1975-1995 is used as one variable in a comparison of a number of institutional variables.

Jordan, Jerry L. (1997). Jobs Creation and Government Policy. Cato Journal 16 (3) (Winter): 287-94.

Argues that employment-creating initiatives or job-creation policies hinder the creation of new technology and the process of "creative destruction." Also argues that the role of government monetary intervention in the economy should be limited to creating stable monetary policy.

Makes reference to the general conclusions of Economic Freedom of the World: 1975-1995 regarding economic freedom and income and growth.

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Mbaku, J.M. (December 1997). Africa in the post-Cold War era: Three strategies for survival. Journal of Asian and African Studies. 32 (3-4): 223-244.

Park, Walter G., and Juan Carlos Ginarte (1997). Intellectual Property Rights and Economic Growth. Contemporary Economic Policy 15 (July): 51-61.

The authors have compiled an index of intellectual property rights, and examine its effects on growth and the factors of production (investment, schooling, and R&D). The paper finds that IPRs affect economic growth indirectly by stimulating the accumulation of factor inputs like R&D and physical capital.

Uses summary ratings of Economic Freedom of the World: 1975-1995 as a control variable for market institutions in the analysis.

Trebilcock, Michael J. (1997). What Makes Poor Countries Poor?: The Role of Institutional Capital in Economic Development. Chapter in The Law and Economics of Development, edited by Edgardo Buscaglia, William Ratliff and Robert Cooter. Greenwich: JAI Press.

Discusses the general conclusions regarding economic freedom and growth found in Economic Freedom of the World: 1975-1995.

Ayal, Eliezer B., and Karras Georgios (1998). Components of Economic Freedom and Growth: An Empirical Study. Journal of Developing Areas 32 (Spring): 327-38.

The paper uses regression analysis to examine the effect of the components of economic freedom on growth, output and investment and finds that "economic freedom enhances growth both via increasing total factor productivity and via enhancing capital accumulation." It also identifies components that have the highest statistical effects on these variables, with the aim of informing policy makers.

Uses component ratings from Economic Freedom of the World: 1975-1995 as the main data source for institutional variables.

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Chafuen, Alejandro (1998). Estado y Corrupcion. In Alejandro Chafuen and Eugenio Guzmn, Corrupcin y Gobierno (Santiago, Chile: Fundacin Libertad y Desarrollo): 45-98.

Finds that corruption is negatively related to economic freedom.

Economic Freedom of the World: 1975-1995 and Transparency International are the main data-source for institutional variables.

Dawson, John W. (1998). Institutions, Investment, and Growth: New Cross-Country and Panel Data Evidence. Economic Inquiry 36 (October): 603-19.

This paper outlines the alternative channels through which institutions affect growth, and studies the empirical relationship between institutions, investment, and growth. The empirical results indicate that (i) free-market institutions have a positive effect on growth; (ii) economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment; (iii) political and civil liberties may stimulate investment; (iv) an important interaction exists between freedom and human capital investment; (v) Milton Friedman's conjectures on the relation between political and economic freedom are correct; (vi) promoting economic freedom is an effective policy toward facilitating growth and other types of freedom.

Uses Economic Freedom of the World: 1975-1995 as the main data source for institutional variables.

De Haan, Jakob, and Clemens L.J. Sierman (1998). Further Evidence on the Relationship between Economic Freedom and Economic Growth. Public Choice 95: 363-80.

Primarily investigates the robustness of the index of economic freedom devised by Gerald Scully and D.J. Slottje and determines that the robustness of results depends heavily on how freedom is measured. Finds that some specifications are robust predictors of the growth rate of real per-capita GDP (1980-1992) but few are robust for investment share of GDP.

Empirical analysis on Economic Freedom of the World: 1975-1995 is limited to correlation with the Scully and Slotjie's index. Suggests further empirical work be done on Economic Freedom of the World.

Elbadawi, I. and Schmidt-Hebbel, K. (December 1998). Macroeconomic policies, instability and growth in the world. Journal of African Economy. 7: 116-168 Suppl. 2.

Farr, W. Ken, Richard A. Lord, and J. Larry Wolfenbarger (1998). Economic Freedom, Political Freedom and Economic Well-Being: A Causality Analysis. Cato Journal 18 (2) (Fall): 247-62.

The paper uses Granger causality analysis to demonstrate that economic freedom "causes" economic well-being and economic well-being "causes" economic freedom. Additionally, the authors argue that economic well-being causes political freedom but that there is no causation flowing from political freedom to economic well-being. The paper also finds no evidence of a casual relationship in either direction between economic freedom and political freedom. Indirectly economic freedom causes political freedom through its effect on economic well-being.

Economic Freedom of the World: 1975-1995 and the Freedom House index of political rights and civil liberties are the main data sources for institutional variables.

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Ford, John B., Kiran W. Karande, and Bruce M. Seifert (1998). The Role of Economic Freedom in Explaining the Penetration of Consumer Durables. Journal of World Business 33 (1): 69-86.

The study examines the link between economic freedom (a measure of government intervention) and the penetration of three durable goods (televisions, radios and automobiles) across countries.

Cites conclusions of Economic Freedom of the World: 1975-1995; uses other indexes of economic freedom for empirical work.

Grubel, Herbert G. (1998). Economic Freedom and Human Welfare: Some Empirical Findings. Cato Journal 18 (2) (Fall): 287-304.

The paper compares economic freedom to income, growth, unemployment in the OECD, the UN Human Development Index, life expectancy, literacy, poverty, and income distribution. It finds that economic freedom does not have a cost in terms of income levels, income growth, unemployment rates, and human development.

Economic Freedom of the World: 1997 Annual Report is the main data source for institutional variables.

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Gwartney, James, Randall Holcombe, and Robert Lawson (1998). The Scope of Government and the Wealth of Nations. Cato Journal 18 (2) (Fall): 163-90.

The paper examines the effect of the size of government in OECD countries upon economic growth. This paper draws on the authors' Joint Economic Committee Study, The Size and Functions of Government and Economic Growth.

Makes reference to the general conclusions regarding economic freedom and income and growth as published in Economic Freedom of the World: 1975-1995 and Economic Freedom of the World: 1997 Annual Report.

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Henderson, David (1998). The Changing Fortunes of Economic Liberalism. London: Institute of Economic Affairs.

A comprehensive review of the trends in economic liberalism in the last century. The book covers economic liberalism in thought and practice as well as discussing how the climate of political and popular opinion has both helped and constrained the development of liberal policy. One section uses the Economic Freedom of the World to discuss the progress made by countries engaging in economic reform and the appendix discusses the derivation, benefits, and limitations of the Economic Freedom of the World.

Economic Freedom of the World: 1975-1995 is the only quantitative source for institutional variables.

Johnson, James P., and Tomasz Lenartowicz (1998). Culture, Freedom and Economic Growth: Do Cultural Values Explain Economic Growth? Journal of World Business 33 (4): 332-56.

The paper discusses which cultural values are associated with economic freedom, drawing on two international quantitative cultural indexes.

Uses the summary ratings from Economic Freedom of the World: 1975-1995 as one of a number of institutional variables.

Johnson, Simon, Daniel Kaufmann, and Pablo Zoido-Lobaton (1998). Government in Transition: Regulatory Discretion and the Unofficial Economy. American Economic Review, Papers and Proceedings (May): 159-239.

Empirically studies the effect of institutional quality on the share of the unofficial economy in GDP.

Uses the component, Equality of Citizens under the Law and Access of Citizens to a Non-Discriminatory Judiciary, of Economic Freedom of the World: 1997 Annual Report as one of a number of institutional variables.

Kealey, T. (April 1998). Why science is endogenous: a debate with Paul David (and Ben Martin, Paul Romer, Chris Freeman, Luc Soete and Keith Pavitt). Research Policy. 26 (7-8): 897-923.

Lim, Linda Y.C. (1998). Whose "Model" Failed? Implications of the Asian Economic Crisis. Washington Quarterly 21 (3): 25-36.

The paper examines the conflicting interpretations of the role of governments and economic freedom in the success and subsequent crises in Asia.

Cites conclusions of Economic Freedom of the World: 1975-1995.

Mbaku, John Mukum, (1998). Constitutional Engineering and the Transition to Democracy in Post-Cold War Africa. The Independent Review 2 (4) (Spring): 501-17.

Discusses the constitutional guarantees necessary to secure economic freedom and why such guarantees are important. Focuses specifically on Africa.

Makes reference to the general conclusions of Economic Freedom of the World: 1975-1995 regarding economic freedom and income and growth.

Milhaupt, Curtis (1998). Property Rights in Firms. Virginia Law Review 84: 1145-94.

Discusses how differences in property rights and corporate governance systems arise within differing institutional frameworks.

Uses the Property Rights component of Economic Freedom of the World: 1975-1995 as one of a number of institutional variables in case-study analysis.

Nelson, Michael A., and Ram D. Singh, (1998). Democracy, Economic Freedom, Fiscal Policy and Growth in LDCs: A Fresh Look. Economic Development and Cultural Change 46 (4) (July): 677-96.

The study examines the effect of democracy on economic growth after controlling for a number of variables for the size of government and institutions. The study finds that it is not the redistributive policies of democratic governments that hinder development in developing countries but the lack of economic freedom.

Uses the precursor to Economic Freedom of the World, Measuring Economic Freedom, by James Gwartney, Walter Block and Robert Lawson, a chapter in Stephen Easton and Michael Walker (eds.), Rating Global Economic Freedom (Vancouver: The Fraser Institute, 1992). The summary ratings of Measuring Economic Freedom are used as one variable in a comparison of a number of variables for institutions and the size of government.

Norton, Seth W. (1998). Poverty, Property Rights, and Human Well-being: A Cross-national Study. Cato Journal 18 (2) (Fall): 233-45.

The paper compares property rights to indicators of development and determines that the well-being of the world's poorest inhabitants [is] sensitive to the cross-national specification of property rights. The paper shows that well-specified property rights enhance the well-being of the world's most impoverished.

Economic Freedom of the World: 1997 Annual Report and the Heritage Foundation's Indices of Economic Freedom are the main data source for institutional variables.

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Norton, Seth W. (1998). Property Rights, the Environment, and Economic Well-Being. In Peter J. Hill and Roger E. Meiners (eds.), Who Owns the Environment (Rowman & Littlefield): 37-54.

Investigates whether countries with better property rights have better performance on environmental measures.

Uses the summary ratings of Economic Freedom of the World: 1975-1995 as one of four measures used as proxies for property rights.

Porket, J.L. (1998). Is the state in retreat? Politicka Ekonomie. 46 (6): 805-815.

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Economic Freedom of the World - Peer-reviewed papers ...