Unexpectedly Intriguing!
September 15, 2009

We couldn't help notice an unusual coincidence yesterday. First, the Economic Freedom of the World 2009 Annual Report has just been released by the Fraser Institute (HT: DoL), which is itself a pretty momentous event. Then we found that Will Franklin has tapped the Fraser Institute's 2008 Economic Freedom of North America to create a chart that ranks individual U.S. states and Canadian provinces according to their relative levels of economic freedom.

We thought we'd mark the occasion by taking the figures we already had for each U.S. state and Canadian province's GDP per Capita adjusted for Purchasing Power Parity for 2004 and correlate that data with their respective Economic Freedom Index score from 2008. The chart below reveals what we found:

GDP-PPP per Capita 2004 vs Economic Freedom Index Score 2008, U.S. and Canada

It would appear that there's a pretty strong correlation between how much economic output a state or province generates per person and the level of economic freedom that exists in each.

Will Franklin comments on the Economic Freedom Index and the general correlation he observes between it and how a state or province performs economically:

The index is based on 10 components in three categories:

1) Size of Government;
2) Takings and Discriminatory Taxation; and
3) Labour Market Freedom.

Interesting is how many of the most free states and provinces in the study are performing better economically than the states and provinces in the bottom half of the study.



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