A NEW INSTITUTIONAL APPROACH OF THE COMPLEX CORRELATION BETWEEN ECONOMIC FREEDOM AND ECONOMIC GROWTH

This paper proposes to re-examine the relationship between economic freedom and economic growth from a neo-institutional perspective. Two principal thesis are considered: (1) political institutions and the distribution of resources are the fundamental determinants of economic institutions and therefore of growth and (2) the extent to which political institutions and human interactions in society are formed around the concept of freedom constitutes one key determinant of growth, perhaps the ultimate cause for economic agents to actually create and accumulate. To study the relationship mentioned above we use the Index of Economic Freedom that aggregates the following items: Business freedom, Trade freedom, Fiscal freedom, Government size, Monetary freedom, Investment freedom, Financial freedom, Property rights, Freedom from corruption, Labour freedom. Finally, our aim is to review and extend the empirical evidence on the relationship between economic freedom and economic growth. For this reason we build a comparative study of 27 EU countries, including Romania, in order to show how these ten freedoms affect the economic growth indicators.