The National Summit on Africa recently met in Washington, D.C., to
discuss economic growth programs for the continent's miserably impoverished
nations. I'm betting they ignored the ticket out of poverty amply
demonstrated in the Washington-based Heritage Foundation's 2000 Index of
Economic Freedom, authored by Gerald P. O'Driscoll, Kim P. Holmes and
Melanie Kirkpatrick. The index is an economic freedom ranking of the world's
nations. The measurement factors include: trade policy, fiscal burden of
government, government intervention in the economy, monetary policy,
property rights, banking regulation, capital flows and foreign investment,
and wages and price controls.
The rankings contain no surprises. Hong Kong has the greatest amount of
economic freedom, followed closely by Singapore. New Zealand ranks third,
and tied for fourth place are: Bahrain, Luxembourg and the United States.
Rounding out the list of nations the authors categorize as economically free
are: Ireland, Australia, Switzerland and the United Kingdom. The rest of the
world's economies fit the categories of being: mostly free, mostly unfree or
repressed. At the repressed end of the spectrum are: North Korea, Iraq,
Libya, Somalia, Cuba, Congo, Laos, Iran, Angola and 14 other countries.
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It doesn't take rocket science to figure out which nations' citizens
enjoy higher standards of living, per capita income, life expectancy and
economic growth rate. It has nothing to do with natural resources. The
United States is rich and also rich in natural resources. Hong Kong and England
are rich but poor in natural resources. The two natural resources richest
continents are Africa and South America. Yet South America and Africa are
homes to some of the world's most miserably poor people.
Sometimes colonialism is used as an excuse for poverty. That's nonsense.
The world's richest nations were former colonies -- Hong Kong, Australia,
New Zealand and the United States -- while some of the most miserably poor
nations, like Nepal and Ethiopia, were never colonies.
Without question what produces wealth and high living standards is
economic freedom -- not democracy. After all, India, politically, is a
democracy but economically it is mostly unfree and poor. There are countries
that do not have much of a history of democracy, such as Chile, Taiwan and
Hong Kong, which are far wealthier than some of their more democratic
counterparts because their economic systems are free or mostly free.
Look at areas of the world considered generally poor, the so-called Third
World nations of Africa, Southeast Asia and South America. In the case of
south-of-the-Sahara Africa, we find that Mali, Benin, Zambia, Mauritius,
Namibia, Botswana and South Africa are better off than their impoverished
neighbors. In Asia and the Pacific, we find that Thailand, South Korea,
Taiwan and Japan are richer than their impoverished neighbors. For the most
part, it's the same story in South America, where we find nations like Chile
and Argentina richer than their neighbors. What's common to these richer
nations is their citizens have a greater measure of economic freedom.
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The lesson is clear: have economic freedom and grow rich, or have
extensive government control and interference, and stagnate and be poor. A
country's institutional infrastructure is critical to the well-being of its
citizens. The most critical are protection of private property, enforcement
of contracts and rule of law -- not IMF bailouts, foreign aid and other
To help our fellow man around the world, we have to convince him to
create the institutional infrastructure for wealth creation and ignore the
"expert" advice from our State Department and academics. Abundant evidence
shows that if a nation does not have a measure of economic freedom, no
amount of handouts will make it rich. To the contrary, handouts make
political survival possible for the elite, whose policies keep a nation