Political Freedom & Prosperity
Political freedom and economic freedom are not perfectly correlated, but history indicates the two are linked. Political freedom often lays the foundation upon which economic freedom—and therefore broad prosperity—can be built. For example, the rule of law that respects property rights, enforces contracts, and punishes corruption is essential for the functioning of enterprises. These conditions are most often found in countries where free elections and active participation by the electorate ensure that government officeholders are responsive to the common good.
A society that allows its citizens to take part in politics also encourages civic participation, concern for the common good, and a sense of personal responsibility—all traits that support enterprise and economic growth. The strong link between political freedom and economic freedom is supported by data from surveys and reports of various organizations, including Freedom House, a U.S.-based nonprofit that rates countries on political rights and civil liberties. Freedom House, which issues an annual report on the state of freedom in the world, has tracked trends in political rights and civil liberties for more than 50 years.
Click the image to read Freedom House’s latest report.
Political Freedom in the Developing World
One of the obstacles holding back developing nations is political oppression. “Bad governance” is one of the four main “poverty traps” identified by Sir Paul Collier, an development economist at the University of Oxford. Dictatorships and military juntas discourage the conditions necessary for economic development. In addition, the dominance of the political sphere over and above other spheres creates many bad incentives. In many poor nations, notes author and psychiatrist Theodore Dalrymple, “there’s no way of getting on in the world or becoming prosperous other than by finding a political sponsor.”
When people stand to gain more by political success than by entrepreneurial success, the most talented and ambitious individuals will tend to direct their energy toward success in the political sphere rather than to creating jobs and wealth through business activity. When minorities or individuals are excluded by the powers that be rather than incorporated as active participants in the political and economic arenas, they will take their skill, creativity, and drive somewhere else, depriving their native country of its most important resource: human capital.