Economic Freedom and Productivity Growth in Resource-rich Economies》.pdf

World Development Vol. 72, pp. 109–126, 2015 0305-750X/ 2015 Elsevier Ltd. All rights reserved. /locate/worlddev /10.1016/j.worlddev.2015.02.014 Economic Freedom and Productivity Growth in Resource-rich Economies MINOO FARHADI a, MD. RABIUL ISLAM b and SOLMAZ MOSLEHI a,* a Monash University, Australia b Deakin University, Australia Summary. — The focus of this paper is to test whether free market institutions that protect property rights and support freedom of choice and voluntary exchange can change the curse of natural resources into a blessing. To examine the above question, this paper uses the Fraser Institute’s economic freedom index and its five sub-indices, namely government size, property rights, access to sound money, freedom to trade, and setting proper regulations. Using data from 99 sample countries over the period 1970–2010, the system GMM estimates suggest that the negative growth effects of resource rents may turn positive in countries with greater economic freedom. 2015 Elsevier Ltd. All rights reserved. Key words — natural resources, economic freedom, productivity growth 1. INTRODUCTION We build our theoretical argument on the strand of litera- ture that studies the attractiveness of productive versus unpro- The idea that, for some countries, an abundance of natur