James d. Gwartney

Exhibit 13: Economic Freedom and Income per Capita
$5,649
$11,465
$18,510
$40,376
0
9,000
18,000
27,000
36,000
45,000
Least Free
Third
Second
Most Free
Economic Freedom Quartile
GDP per capita, 2016
Countries with greater economic freedom have substantially higher per-capita incomes.
Note: Income = GDP per capita, (PPP constant US$), 2016.
Sources: Average Economic Freedom Panel Score, 1995–2016; World Bank, 2017, World Development Indicators.
The graphs in this section are taken from James Gwartney et al. Economic Freedom of the World: 2018 Annual Report
at: 
https://www.fraserinstitute.org/studies/economic-freedom
.
Not only were freer countries more prosperous overall, the benefits of a freer economy
extended to poorer households. Exhibit 14 shows the average per capita income of the poorest
tenth in each country sorted by their level of economic freedom. Even without considering the
benefits of freedom itself, given a choice, poor households would obviously choose to live in
the free societies. This marked difference says a great deal about the migration pressures that
have come to dominate public policy discussions in many countries in recent years.

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Exhibit 14: Economic Freedom and the Income Earned by the
Poorest 10%
$1,345
$2,774
$3,721
$10,660
0
2,000
4,000
6,000
8,000
12,000
10,000
Economic Freedom Quartile
Least Free
Third
Second
Most Free
Annual income per capita
of poorest 10%, 2016
The amount of income, as opposed to the share, earned by the poorest 10% of the population is much higher in countries
with higher economic freedom.
Note: Annual income per capita of poorest 10% (PPP constant US$), 2016.
Sources: Average Economic Freedom Panel Score, 1995–2016; World Bank, 2017, World Development Indicators.
Of course, using the incomes of the lowest 10% to measure poverty can be misleading.
The poorest 10% may be living rather well in a rich country, but truly suffering in a poor
country. Let us examine Exhibit 15, which shows the fraction of the population living in
“extreme” or “moderate” poverty as defined by the World Bank. Extreme poverty means living
on $1.90 per person per day while moderate poverty means less than $3.20 a day (U.S. dollars
adjusted for price differences).
(52)
 It is easy to see the advantage of living in a country that has
high levels of economic freedom—citizens of such countries are very unlikely to be poor.

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130
Globally, the world has made great progress in eliminating poverty. According to the World
Bank, 42% of people lived in extreme poverty in 1981. By 2016, this fraction had fallen to less
than 10%. While there is still a way to go, the focus on market economics by United States
President Ronald Reagan (1981–1989) and United Kingdom Prime Minister Margaret
Thatcher (1979–1990) was surely a major factor in this progress.