The two freedoms, economic growth and development: An empirical study

Log-linear methods are applied to categorical data containing economic free dom, political freedom, the level of income, and the rate of economic growt h for a panel of about 100 countries from 1975 to 1992. The main results ar e: given economic freedom, the rate of economic growth is independent of po litical freedom and the level of income; given the level of income, politic al freedom is independent of economic freedom and the growth rate. The anal ysis suggests the fundamental effects of economic freedom in fostering econ omic growth, and a high level of income as the condition of a high degree o f political freedom.