تحليل العلاقة بين مؤشرات الحرية الاقتصادية والانتاجية الكلية لعوامل الانتاج (بلدان مختارة)

Analysis of the Relationship Between Economic Freedom & Total Factor Productivity Indicators ( Selected Countries)

Abstract:

The experience of many countries who implemented extremism and fanaticism in adopting or refusing economic freedom showed negative impacts on the efficiency of the economic performance. This experience led to reconsider the role of the state, and created   continuous controversy to define the optimal borders of the economic freedom, within which the efficiency of the economic performance was achieved.

In concurrence with this controversy, significant and rapid improvements in the production instruments, along with rapid growth in the phenomenon of economic globalization, emerged the concept of sustainability in growth as a strategic objective. The concept of sustainability in growth shifted the focus, in efforts to boost competitiveness and increase growth rates, towards improving the efficiency of performance rather than relying on available resources. This shift in focus surfaced the concept of total productivity of factors of production ‘Total Factor Productivity (TFP)’ as a criterion for assessing the level of competence in economic performance, and a basis for sustainability of economic growth.

This new reality has created an impression that a relationship and an organic correlation between economic productivity freedom and the total factors of production existed. This impression, along with relative success of some liberal experiences in achieving high levels of overall productivity, promoted the economic freedom and the belief of its positive affect. Promoting the economic productivity freedom theory provided enough justification to the related international organizations to adopt the principle of economic openness as basis for increasing efficiency in performance.

This research focuses on measuring and analyzing the relationship between the economic productivity freedom and the total factors of production, in realization of its importance in determining the approach that the state can adopt in managing the economy. The research assumes a positive relationship between the economic freedom (as an independent variable) and the productivity of factors of production (as dependent variable). In order to verify the validity of this assumption, the research is divided into three chapters in addition to conclusions and recommendations. The first chapter presents the theoretical framework of economic freedom. The second chapter presents the theoretical aspects of the total productivity of factors of production. And the third chapter analyzes practical aspects of three case studies, Canada, Egypt and Malaysia and considers the possibility of employing the results in Iraq.

   The main conclusions reached by this research is the existence of weak relationship (not significant statistically) between economic productivity freedom and total factors of production. This weak relationship reveals that the level of productivity is not related to the extent of the role of the state in the economy but to the nature of this role and its suitability to the matter. This research proposed several recommendations most notably the need to target specific levels of total productivity by involving public and private sectors. These goals can be achieved gradually within well-defined strategy.