Economic Freedom and Economic Growth in South Africa

Abstract

The economic growth and economic freedom nexus is studied in this article and applied to South Africa in an empirical study. Economic freedom is founded on the free or private market economy, based on competition, where voluntary exchange occurs and a legislative framework ensures the safety of market agents and private property. As part of the literature study, the Index of Economic Freedom, the Economic Freedom of the World Index and the Freedom in the World Index were studied and applied to South Africa. An empirical analysis was conducted, cross-correlation functions were estimated, and Granger causality functions, regression analysis and finally a vector auto-regression model (VAR) were constructed and estimated. The research findings from South Africa support the literature, suggesting that there are indeed some indications that greater levels of economic freedom support higher rates of economic growth in a country.

Keywords

• economic freedom
• privilege
• regulation
• monopoly
• economic growth