The economic freedom contributes to the economic growth , including availability of enhancing competition among actors, leading to increase the innovation, efficiency, productivity, and the increase of investments.
And the rule of law operates on the protection of property rights, and contractual rights, which provides protection of economic freedom and economic growth.
the economic freedom is defined as the freedom to produce goods and services and consumption, and traded without the use of force, fraud and theft.
And it reinforces it in the institutions, the rule of law, respect the rights for private property and freedom of contract, and it is intended by the rule of law that the state ruled by law and governed by it , in the light of the broad common economic and social values ,and ethical standards are governed by the dynamic movement of society “, namely:
“A system of behaviors and psychological processes that occur within a social group”, as well as the inclusion of the law and equality in the status and opportunities without interfering in the physical aspect , because it would limit the economic freedom itself .
The property rights is represented by the right to control the property and benefit from it , and the right of conversion rights by means of voluntary to achieve the self independence for the people according to their standards and goals, without resorting to force, fraud or theft.
The freedom of contract lies in the freedom of the people in their contracts in accordance with legal rules fit in with their own circumstances, in the framework of the Constitution and the freedom available to contractors to resort to the judicial .
The definition of standard figure of economic freedom has included the basic conditions of it, and reflects the degree which then has the absolute right to own property, and the transfer of labor, capital and goods in a way that it does not affect the limits necessary to protect the citizens and to ensure the sustainability of freedom itself », the index contains six levels.
In the 2017 Index of statistics of Economic Freedom showed, a report for the Institute of the American ” the Heritage Foundation , ” the exit of Iraq and four Arab states , Libya, Somalia, Syria and Yemen and also included the Liechtenstein , from the international classification, while UAE was risen which has maintained its first Arab rank to be the eighth world – state in the sequence.
The statistics published on the site of electronic Institute indicated to , which was established by the Heritage Foundation and the Wall Street Journal that the Emirates ranked first among Arab countries , and the eighth in the world, as it went up 17 ranking at one time within the index, while Qatar came in second among Arab countries and 29th worldwide.
Bahrain ranked third among Arab countries , and 44 globally, then Jordan ranked fourth Arab world and 53 worldwide, and Kuwait in the fifth Arab and 61 globally and Saudi Arabia ranked sixth globally and 64 Arab world according to the statistics.
And the Sultanate of Oman ranked the seventh position among Arab countries and 82 globally , followed by Morocco ranked 86 globally, then Tunisia 123 worldwide,, Lebanon 137 , Egypt was ranked 144 globally, Sudan ranked 164 and Algeria was ranked 172 internationally.
According to the statics of American Institute itself, Hong Kong ranked first globally in the Index of Economic Freedom for the current year, followed by Singapore, New Zealand, Switzerland and Australia, respectively, while the United Kingdom ranked 12, Luxembourg 14, United States 17, Germany 26 .
the index consists of , issued by the Heritage foundation Institute (based in Washington) , 4 main and sub measures – :
• The first measure: the rule of law, and its standards: the extent of respect for private property rights and freedom from corruption.
•Thesecond measure: Financial Freedom consists of: financial freedom of a country, the size of government spending.
• Thethird measure: the organizational efficiency, and is divided into: the freedom of doing business, and freedom of action, and monetary freedom.
•Fourth measure: includes theopening up of markets, and is divided into: free trade, and investment freedom, and freedom of financing activity.
The index figure of economic freedom includes ten items namely: Economic freedom, and business freedom, trade freedom, financial freedom, freedom from government interventions , monetary freedom, investment freedom, freedom of banking, intellectual freedom, and freedom from corruption and labor freedom.
Some economists believe that the components of the index is not sufficient to mark the proper performance of an economy, and that the approach of the highest degrees of freedom (100%) does not necessarily mean that the policies and economic environment of a country, is the most convenient and stimulating for the economic freedom, and some standard applied studies indicated to that lack of strong correlation between the index and the actual performance of the national economy, as the following ten states were ranked on the top of the economic freedom in the world: Hong Kong, Singapore, Ireland, Australia, USA, New Zealand, Canada, Chile, Switzerland and Britain. While China registered a record low while its economy experiencing strong and rapid growth.
And the human experience proved of the close relationship between political and economic freedom, as demonstrated the successful economic performance and ensure the growth of a society and sustainable development, to achieve justice and social welfare.
And it emphasized that the correct of the structural imbalances depends on the creative ability of the operational and planning leaders in finding the appropriate formulas in the mobilization of political, economic, social and human development elements and activated it in each country.
Human experiments also confirmed that the representativeness and efficiency of the index of economic freedom and its components depends on the accuracy of the information and formulas to address it , and the extent of their representation of the phenomenon , which is intended to measure, and to know the degree of association and their impact on other variables associated with it, economic freedom is a product of complex human and physical interaction that to achieve it requires the availability of preconditions , most notably the elimination of hunger, poverty, disease and unemployment.
And associated with economic freedom the following freedoms:
– Freedom from government intervention: which is reflected in the size of the government ‘s share, the size of public spending, and cash and material support.
– The freedom to enjoy to guarantee of the rights of private property : it means the economic freedom for the legal infrastructure for the rights of private property, and to ensure those rights and we mean essentially to guarantee them from being confiscated by private parties, as some aspects of this kind of freedom is related to the guarantee from being confiscated by the state, because the more decrease of the government ‘s share, the more freedom from government interference .
– Free access to the real cash: that related to the entry of individuals, companies and economic bodies to real cash. And this kind of freedom is measured by indicators of monetary independence in the country.
– The freedom of international exchange: means the freedom of international exchanges with economic actors outside the country, and this kind of economic freedom is estimated by the size of tariff barriers and non-tariff barriers to trade.
– Freedom of transactions: that kind is relating to freedom from the government rules related to the transactions in the three markets , namely: market of the financial capital, and the labor market, and market of products which means the general rules for doing business, The Economic Freedom of the financial capital market will increase the freedom in the operations of financial brokerage .
The difference between economic freedom and the rule of law
the economic freedom affects the economic growth in two ways:
direct way , is to create incentives to increase productivity, by increasing the efficiency of dealing with certain technologies, or technological advances,
and through indirect way which is to increase investments.
The lack of comprehensive protection of the rights of private property and contractual rights is a real constraint on economic freedom, which lead to the impediment of investments and trade or it frustration .
As such, the rule of law, protection of the rights of private property , contractual rights, representing a prerequisite for economic growth and high productivity , which led by private investment. This initial condition is complemented by an appropriate availability of public goods and services, in terms of quality and quantity, and effectively provided.
Iraq and economic freedom
the index of economic freedoms took Iraq out from its ranked for 2017; for many reasons including: corruption issues , which is a disease that cause a damage to the governments , stunt the growth and prosperity and progress movement in government and society, and we mean political corruption in the first place, and then economic corruption, lawlessness or deficit in the mechanisms of action, and the types of corruption was increased in Iraq , particularly the institutions after 2003 became binding by the sectarian balance, which caused paralysis for all the mechanics of proper economic handling.
The wastage of national wealth is the greatest kinds of corruption, and in the light of this , we see the negative repercussions that have affected and directly on development and economic life of the country all tracks.
We conclude from the foregoing that Iraq , which suffers political instability, can not plan for the development of the economy, regardless of its accuracy, transparency and objectivity and all his economic plans will be governed by failure .
Why Iraq does not take its real role:
And briefly a proliferation of urban underdevelopment in Iraq, and the damage of its social, political, intellectual infrastructure , and the structure of the Iraqi society as a whole, were of a prominent role in the lack of broad solutions to the problems being experienced by the country, which had been accumulated with time, in the absence of real required seriousness from the politicians and leaders of change in addressing them , as well as many of them had no knowledge of solutions and correct scientific methodology to address the political and socio – economic problems and even foreign ones, and there is no intention for sure in the use of global experience, the fact that it is a challenge for personal experiences, and a waste of funds.
One of the reasons of corruption in Iraq:
some government officials enjoy wide freedom of action for the potential of Iraq and with little accountability , taking advantage of their positions, and the rigidity of many of the laws that have become incompatible with the new situation of the country to enact laws that serve their interests.
And what increased the corruption in Iraq is the absence of central authority for all the legislation and the issuance of laws and policies to prevent whereby gains directly to some officials in the government apparatus, and weakness or loss of the role of civil society institutions, leading to the spread of the phenomenon of corruption, in addition to the weakness of the ethics of business career and turn a blind eye about the accountability of senior officials and abuse of power, which reflected negatively on the Iraqi economy and weaken it .
The impact of weak economic growth on the stability of the investment and attract it and provide the appropriate environment for it, and increases the cost of the projects, and weakens the quality of basic public services and infrastructure , an increasing the number of people with weak souls to the pursuit of profit.
The impact of corruption on the nature of spending as the corrupt official resort to spending on items that are easy to get through it on a large bribes, leading to the weakening of the role of the state and the occurrence of disturbances and instability, and doubt for the effectiveness of the law, trust and honesty and threaten the public interest.
The rule of law and the proper economic planning contribute to economic growth; and the creation of creativity and increase productivity through competition in the market, and due to technological progress made by competition and economic freedom, the economic institutions should to maintain a degree of flexibility to be able of a continuing adaption to the new of the needs of business and technology and increase the investment.
Translated by: Mudhaffar al-Kusairi
Rawabet Research and Strategic Studies Center