Which Economic Freedoms Contribute Income per Capita? Are Results Sensitive to the Indicators and the Estimation Methods?

This study investigates the roles of indicators, time-series analysis, and estimation techniques in economic freedom-growth relationship. We construct a new freedom index using annual data from Turkey between 1970 and 2006. The index consists of six components: government size, market intervention, soundness of the money and banking system, freedom of capital markets, freedom to trade, and institutional structure. The empirical results indicate that the relationship between economic freedom and per capita income is sensitive to indicators and estimation techniques. We also summarize the emerging process of a market economy and its accompanying growth performance.