Liberdom Index 2010

Liberdom Index 2010

Liberdom Index 2010 summarized in a single indicator the institutional framework of 137 economies worldwide. The index includes data relating to the exercise of civil, political and economic liberties and governance from various sources.

The institutional framework is key to overall business development and attracting foreign investment and is the base that supports the growth and entrepreneurship in an economy.

The countries with stronger institutional framework in accordance with Liberdom Index 2011 are: New Zealand, Switzerland, Denmark, Canada, Finland, Australia, Sweden, Netherlands, Luxembourg and Norway. By contrast, states with greater institutional weaknesses are: Myanmar, Zimbabwe, Democratic Republic of Congo, Chad, Central African Republic, Angola, Guinea-Bissau, Republic of Congo, Venezuela and Syria.

Among the 137 countries included in the Index Liberdom 2010, Kenya and Jordan  were the countries that experienced further deterioration of their institutional environment between 2009 and 2010 (those countries got down 10 levels in the ranking), followed by Ukraine (7) and Ethiopia, Fiji, the Philippines and Honduras (6) . Most improved countries were Thailand (12 seats), Paraguay (9) and Turkey and Colombia (8). In Western Europe, Ireland, United Kingdom, Portugal, Greece, Austria, and Holland have worsened their position, while Italy, Germany, Luxembourg, Sweden and Finland improved its position.

 

Liberdom Index methodology

Liberdom Index 2010 summarized in a single indicator the institutional framework of 137 economies worldwide. The index includes data relating to the exercise of civil, political and economic liberties and governance. Information on economic freedom comes from the Fraser Institute, which summarizes 42 variables grouped into five dimensions. The World Bank is the source of information on governance. Given that this institution does not provide an aggregate indicator of governance, but six components, for the calculation of the Liberdom index such aggregation is performed by factorial analysis technique to obtain a governance indicator that reflects the common part of these components to each of the countries included in the analysis. Information on civil and political liberties comes from the five dimensions offered by The Economist.

Liberdom Index added three institutional perspectives through factor analysis statistical methodology that allows the reduction of the quantitative analysis and aggregation of highly correlated data. By the extraction method of principal components were obtained by a single component that summarizes, in the Liberdom index, the three areas mentioned, economic freedom, governance and democracy, with an explanatory power of 84% of the original variance.

Metodología Índice Liberdom.pdf