The short-run consequences of the erosion of economic freedom for growth and institutions in Latin America: an unorthodox experimental review of the twenty-first century

Rafael Acevedo and María Lorca-Susino

Revista CEPAL, 2023

Abstract: How economic growth can be improved is a question that has always divided researchers, but it is one of the utmost importance, bearing directly on prosperity, quality of life and human well-being. The research presented here is an experimental review whose purpose is to evaluate the causal effects that the erosion of economic freedom has had on the economic growth rate, corruption, democracy, the transparency of laws, media censorship and judicial constraints in 19 Latin American countries during the twenty-first century. The results show that for each percentage point erosion of economic freedom, the economic growth rate is between 0.3 and 1.6 percentage points lower the following year, while institutions deterioriate in comparison with those of countries where economic freedom has not been eroded. These findings confirm that a freer economic environment not only benefits these countries economically in the short run but improves other regional variables in the long run.

Date: 2023-08-15
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Persistent link: https://EconPapers.repec.org/RePEc:ecr:col070:68773

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