Global economic freedom declined sharply in the wake of the coronavirus pandemic according to the Economic Freedom of the World: 2022 Annual Report released today by the Fraser Institute and co-published in the United States by the Cato Institute.

The decline has been broad-based and dramatic. Some 146 out of 165 jurisdictions saw their scores fall from 2019 to 2020, the most recent year for which there is internationally comparable data. Some of the reasons for the decline include “massive increases in government spending, monetary expansion, travel restrictions, [and] regulatory mandates on businesses.” And although the report does not take a position on the efficacy of policy responses to the pandemic, it finds that the decline “Erases a decade’s worth of improvement in the global average and is more than three times larger than the global decline witnessed in the 2008/09 financial crisis. The coronavirus pandemic was undoubtedly a catastrophe for economic freedom.”

The U.S. rating fell as did its ranking, from 5^th in 2019 to 7^th in 2020. As always, the authors (James Gwartney, Robert Lawson, Joshua Hall, and Ryan Murphy) find that there is a strong relationship between economic freedom and indicators of prosperity. For example, the graph below shows how economic freedom benefits the poor.

This year’s report includes a chapter by Robert Lawson that reviews 721 peer-reviewed, academic papers that look at the impact of economic freedom. Most of the academic literature finds a positive relationship between economic freedom and good outcomes (eg., growth, less conflict, human rights, etc.) and only a minority (about 5%) finds a negative relationship.

Another chapter by Simeon Djankov, creator of the widely used Doing Business report that has been discontinued by the World Bank, proposes how to carry out that important project outside of the Bank’s auspices in an improved way.

See the whole report and all its findings here.