Economic Freedom: The Way for World Economies to Grow
By Christos Papoutsy
(The World Bank's 2001 World Development Indicators support this theory of economic freedom, reporting that the annual per capita income in purchasing power is U.S. $23,325 in free economies; $11,549 in mostly free economies; $3,238 in mostly unfree economies; and $3,829 in repressed economies.)
"Economic freedom is defined as the absence of government coercion or constraint on the production, distribution, or consumption of goods and services beyond the extent necessary for citizens to protect and maintain liberty itself."
The Index of Economic Freedom considers a broad array of factors, including:
Non-tariff barriers to trade, such as import bans and quotas, as well as strict labeling and licensing requirements
The fiscal burden of government, which encompasses income tax rates, corporate tax rates, and government expenditures as a percent of output
The rule of law, efficiency within the judiciary, and the ability to enforce contracts
Regulatory burdens on business, including health, safety, and environmental regulations
Restrictions on banks regarding financial services, such as the selling of securities and insurance
Labor market regulations, such as established work weeks and mandatory separation pay
Black market activities, including smuggling, piracy of intellectual property rights, and the underground provision of labor and other services
Fiscal burden: 4 -- Income and corporate taxation (high tax rate.) Greece's highest income tax is forty-five percent; the highest corporate rate is forty percent. Government expenditures amounted to 43.9% of the GDP.
Government intervention in the economy: 2 -- Better (low level of intervention.) The government consumes fifteen percent of the GDP.
Monetary policy: 2 -- Stable (low level of inflation.) From 1991 to 2000, Greece's weighted average annual rate of inflation was 3.35 percent.
Foreign investment: 3 -- Worse (moderate barriers to foreign investment.) Economist intelligence reports that prospective foreign investors find the Greek bureaucracy obstructive. Language barriers and poor organization are major impediments during initial investment stages.
Banking and finance: 3 -- Stable (moderate degree of restriction.) Although the government has liberalized the banking system considerably as a condition of membership in the European Union, it still owns a significant number of banks.
Wages and prices: 3 -- Stable (moderate degree of intervention.) The government imposes price controls on pharmaceuticals and can set minimum prices for fuel and private school tuition fees.
Property rights: 3 -- Worse (moderate degree of protection.) The court system is a highly time consuming means for enforcing property and contractual rights.
Regulation: 3 -- Stable (moderate degree of regulation.) The Greek government is very bureaucratic and imposes many burdensome regulations. Greeks believe officials in charge of issuing conservation permits take bribes. Although the law against bribery is strict, enforcement is not.
Black market: 3 -- Stable (moderate degree of activity.) Greece's 2001 score from Transparency International is 4.2.
Land area: 131,940 square kilometers
Major industries: tourism, food and tobacco processing, textiles, chemicals, metal products, petroleum
Major agricultural products: wheat, corn, barley, sugar beets, olives, tomatoes, wine, tobacco, potatoes, meat, dairy products
Gross domestic product: $133 billion
GDP growth rate: 3.4%
Export of goods and services: $27 billion
Major export trading partners: Germany 15.9%, Italy 13.5%, United Kingdom 6.4%, United States 5.7%
Imports of goods and services: $37 billion
Major import trading partners: Italy 15.6%, Germany 15%, France 9.2%, Netherlands 6.4%
Foreign direct investment (net): N/A
World Score Score