The Impact of Economic Freedom upon Economic Growth: An Application on Different Income Groups

The objective of the study is to investigate the relationship between economic growth and economic freedom for different income groups. Therefore, the data were collected from 94 different countries belonging to five different income groups in order to cover the period from 2000 to 2010. In the study, relationship between the economic growth of the country and the level of freedom index which Fraser Institute measured and its sub-components constituting was questioned through the panel data analysis method. As a result of the analyses, it was found that there is a statistically significant positive relationship between the level of economic freedom for all income groups and economic growth. With the inclusion of sub-components of freedom index into the model, the effects of such sub-components vary depending on the income groups.