Impact of Political Freedom, Economic Freedom and Political Stability on Economic Growth

Malik Fahim Bashir, Changsheng Xu


The focus of most previous studies on institutions ignores the full range of political and economic institutions that operate in most countries and their importance for determining economic growth. This study fulfills this research gap and endeavored to identify the direct effect of political freedom, economic freedom and political stability on economic growth by using a Panel Data set of 117 countries covering time period from 1980 to 2012. The data was analyzed using the alternative econometric methodologies including panel ordinary least square (OLS), Panel fix effect (FE) and dynamic system generalized method of movements (SGMM).The results revealed that economic freedom and political stability have positive and statistically robust impact on economic growth while we observed a fragile mixed positive and negative effect of political freedom on economic growth..

Keywords: Political Freedom; Economic Freedom; Political Stability; Generalized Method of Moments; panel data.

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ISSN (Paper)2222-1700 ISSN (Online)2222-2855

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