Economic Freedom, at least on Paper

The Heritage Society has rated Armenia 38th in the world for economic freedom, beating many larger more developed economies like Spain, Mexico and Israel. While this is fantastic news for Armenia, I feel that Heritage’s methodology doesn’t accurately portray the real situation.

As Heritage is a conservative organization, it focused almost exclusive on official government actions that affect the market (e.g. laws and regulations) and not on private citizens’ negative impacts. So, an oligarch that controls the sugar market would not count against a country’s economic freedom score. As I understand it, a country that establishes anti-monopoly laws would get a worse score from the Heritage Society because its governmental action impedes on the market, even if the action benefits the market overall.

Heritage does include respect of property rights and freedom from corruption as factors, both which Armenia does very poorly on, but those only constitute two-tenths of Armenia’s final score.

Heritage Society's 2013 World Economic Freedom World Map

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2 Comments

Filed under Economics

2 responses to “Economic Freedom, at least on Paper

  1. Arman Antonyan

    It would count against the score because Oligarchy only exists with government corruption, one of the factors of this meter.

    • Gabe Armas-Cardona

      I see what you’re saying. I guess I could have made the example clearer by only using the word monopoly, since the oligarchs have definitely used political corruption to reinforce their market control.

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