The “tiger” economies of Asia were once poor, but today Hong Kong, Singapore, Taiwan, and South Korea are among the world’s most prosperous. What allows some countries to escape poverty and build new wealth? In a new video from the Center for Freedom and Prosperity (CF&P) Foundation, economist Abir Doumit, a George Mason University professor from Lebanon, explains how economic freedom brings developing nations into the first world.
“Good policy depends on more than just small government,” Doumit explains. “If sustainable economic growth is the goal, there is no substitute for an overall policy agenda of small state, open markets, stable money, property rights, and deregulation.”
Doumit points out that success stories can be found all over the world, correlated with the countries that have the highest economic freedom. Growth in Chile took off when the country liberalized its economy in the 1980s, Ireland and Estonia are both European exemplars of strong property rights and efficient economies, and Botswana is “a bright spot in Africa” that is one of the most market-oriented countries on the continent.
“The evidence overwhelming supports the adoption of classical liberal policies as the key to economic growth,” said CF&P Foundation President Andrew Quinlan. “It’s alarming to see that US taxpayer dollars are going to international organizations that push policies which help keep billions from enjoying prosperity.”
International development organizations like the International Monetary Fund and the United Nations tend to promote counterproductive policies, Doumit points out, which translate to higher taxes and increased government spending.
“Sometimes, the advocates of this approach even argue that there are big governments in rich nations of the western world, and that this is proof that high taxes and lots of government spending must be good for the economy,” Doumit explains. “But this silly argument overlooks the fact that the Western world became rich when government was very small. … In other words, countries like the U.S. became rich first, and then adopted policies such as welfare states and income taxation. The international bureaucracies want the opposite approach. They want less-developed nations to adopt big-government policies, and then hope that prosperity will magically happen. But there’s no nation anywhere in the world that has become rich with big government.”