The Effect of Economic Freedom on Economic Growth

Freedom of choice and competition are viewed as vital factors for economic growth. In this paper, we use a growth model to examine the impact of economic freedom on the economic growth across the world countries for the period 1999-2004. Our study differs from the previous studies in terms of the modeling, the scope of the study, and the selected sample. The results, however, are consistent with those of the previous studies. Given the fact that Iran’s position in the world is low in terms of economic freedom, that economic freedom has a significant role in economic growth, it is necessary for investors and firms to have suitable conditions for transparent and accurate decision-making. Creation of the favorable economic conditions is the responsibility of the government and thus, it is necessary to have defined policies and planning for the establishment of conditions for economic freedom in the society. Creation of social condition for economic freedom of economic agents is a convenient orientation that is favorable with economic growth policies and must be internalized in the Iran's economic policies.