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Economic Freedom Essential to Reduce Poverty

Poverty is a global issue affecting every nation on earth. Over the past hundred years, life expectancy ranged from 30 to 40 years for many people. And if they made it that far, often they did so without adequate food, clothing, and shelter. The past decade has seen massive reductions in the numbers of the global poor, but there is still much work to be done. Today, the number of people in the world living on less than $1 a day is down to around 20% and dropping.

Essential to reducing poverty is economic freedom. China and India have become leaders in economic enterprise and in improving the economic freedoms within their nations. As a result, they have seen millions of people lifted out of poverty. To back up the numbers, the Cato Institute and Canada’s Frazier Institute put out a report called the Economic Freedom of the World report. The study annually looks at five major indicators of economic freedom. Those indicators are size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation. From the indicators, the report lists 141 countries in terms of economic freedom.

The report has found that countries with higher levels of economic freedom grow more rapidly, have higher per capita incomes, and greater longevity than countries with lower levels of economic freedom. The top fifth of countries had per capita incomes seven times higher than the the bottom fifth and the results among the poor are significant. The poor in the bottom tenth in terms of economic freedom had incomes of $1,061 versus poor in the top tenth who had incomes around $8,735.

The report also pointed out that income inequality does not seem to be a factor in economic freedom. As a country becomes more free, the rich do not grow richer at the expense of the poor. Rather the poor also gain an advantage.  Economic freedom improves wealth which also improves health and mortality rates especially among women and children.

People are the solution to poverty and equal distribution of economic freedom will have a greater impact on reducing poverty than redistribution of wealth.

– Amanda Kloeppel
Source: The York Daily Record
Photo: The Guardian