This week’s materials cover the economic growth and freedom through a comparison of the global competitiveness of world economies. The materials that address these critical issues are the World Economic Forum and The Heritage Foundation. The World Economic Forum compares world economies based on twelve pillars of economic development ( Miller, Kim & Holmes, 2015) . On the other hand, The Heritage Foundation ranks countries based on their successful economic policies. Thus, while the World Economic Forum reports much of a particular country’s quantitative data, The Heritage Foundation uses several other qualities metrics in its ranking of country’s level of freedom.
Economic freedom can be defined as the people’s freedom to produce, consume, work, and invest in various ways that are deemed productive. Economic freedom is experienced when there is no interference as well as coercion in people’s economic decisions. A free market economy is the one that is controlled by the forces of the market rather than the government intervention. The main features of an economically free economy are stable prices, secure privately owned properties, enforced contracts, and limited trade barriers. There is a significant difference on the views regarding the evolution of economic freedoms and the assessment of economic freedom tends to be more qualitative and occasionally shaped by various ideologies.
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The Heritage Foundation ranking is known as the Index of Economic Freedom ranks countries based on twelve factors including judicial effectiveness, property rights, government integrity, government spending, tax burden, fiscal health, labor freedom, trade freedom, investment freedom, monetary freedom, and financial freedom ( Miller, Kim & Holmes, 2015) . The scores of all these variables are then compiled into a single score which then ranks the countries from the freest country to the least free one.
Other than The Heritage Foundation’s Index of Economic Freedom, the World Economic Freedom also assesses economies based on their successful economic policies. The World Economic Forum publishes a global competitiveness report on an annual basis ( The World Economic Forum , 2018) . For instance, the 2015 annual competitiveness report ranked the US in the fourth position according to Economic Forum’s the metrics ( Schwab, 2015) . By contrast, Sweden was ranked in position two ( How Economic Growth Benefits You , 2018) . However, The Heritage Foundation’s Index of Economic Freedom ranks the US in the tenth position while Sweden is listed at number eighteen. The difference in the rankings between the Heritage Foundation as well the World Economic Forum us due to the differences in the criteria used. For instance, the Heritage Foundation measures a country’s taxation policy, trade policy, economic output, government consumption, property rights, monetary policy, capital flows, wage and price controls, banking policy, market regulations, monetary policy, and the black market. Thus, the Heritage Foundation takes a very conventional as well as a conservative approach toward the classification of global economies.
The World Economic Forum assigns a significant value to the measurement of a country’s social developments, values, and the opportunities that the people in that country enjoy. Thus, a country’s World Economic Forum rank is influenced by a strong belief system evident in that particular country rather than what the country ought to be doing or is currently doing. The Heritage Foundation’s Index of Economic Freedom is a useful tool used by academicians, policy makers, journalists, teachers, and corporate entities. The index is ideal for analysis because it reflects a country’s economic and political development. Also, the twelve economic freedoms as well as their accompanying historical information have comprehensive facts essential for the understanding of the economic growth as well as the prosperity of nations ( Miller, Kim & Holmes, 2015) . Therefore, the Heritage Foundation’s metric best describes the state of the world economy.
References
How Economic Growth Benefits You . (2018). The Balance . Retrieved 5 September 2018, from https://www.thebalance.com/what-is-economic-growth-3306014
Miller, T., Kim, A. B., & Holmes, K. (2015). 2015 Index of economic Freedom. Washington DC: The Heritage Foundation .
Schwab, K. (2015). World Economic Forum. The global competitiveness report , 2016 , 2015-2016.
The World Economic Forum . (2018). World Economic Forum . Retrieved 5 September 2018, from https://www.weforum.org/
