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2019 | nr 1 | 82--92
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Economic Freedom Analysis of Selected Countries

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Freedom is the foundation of being a man, the source of dignity, the basic factor of existence and the natural law. Historically, human freedom, although it is an inherent law, was a subject to infinite restrictions and threats caused by nature, power and culture. From the economics point of view the relationship between the natural rights of man, and existing state regulations is worth to be examined. The existing limitations of human activities, including business activities, are created in order to make a better life for everyone, but taking into account the imperfection of human beings and the existing public institutions, a delicate balance between the necessary restrictions of the human activity, and the natural right for self-fulfillment of one's own potential can be compromised. In determining the level of economic freedom in a given country, a significant consideration should be given to the analysis of restrictions of freedom, because limitation of activities in various areas serve as an appropriate measure of the level of economic freedom. Freedom of economic activity cannot be absolute, on the contrary, in order to ensure sustainable development and avoid dangerous economic phenomena, freedom of economic activity should be a subject to various limitations. Legal instruments affecting economic freedom allow it to become an issue in which public and entrepreneurial interests intersect. The public interest and any limitation of economic freedom should be presented in an appropriate statutory form, while the basic premise is to prohibit disproportionately severe restrictions. The types of restrictions of economic freedom may be distinguished on the basis of the nature of these restrictions, and there are limitations of a subjective and objective nature. Subject restrictions are presented in the form of specific bans addressed to selected unit groups, due to specific features they possess their ability to set up and run a business must be limited. Level of economic freedom of the country has a direct impact on the development of entrepreneurship. Additory economic freedom leads to more advanced and developed society, because it brings out greater entrepreneurial activity. Economic freedom, being a relatively abstract issue, should be measured by its constituent elements or institutions. Without the institutions that direct entrepreneurship towards market activity and ensure freedom to run a business, sustainable economic development will not be possible. An important requirement related to economic freedom is the necessity of applying measures limiting state interventions. State should not interfere in individual choices of its citizens, limit voluntary trade or free enterprise. Governmental administrations should also not compete with existing private entities that already supply certain goods or services. Excessive taxation is also contrary to economic freedom because it limits an ability of individuals to use their own monetary resources in a way that they consider appropriate. An individual choice is limited by the government when taxes or regulations are imposed excessively regulating voluntary trade. The consequences of state actions in the economy are volatile and the positive impact of government actions that restrict economic freedom is not sufficient justification of such actions. Intensification of imposed restrictions may contribute to a significant reduction of freedom in the economy, which will bring negative effects afterwards. Undesirable effects of state interference in economic life may include such phenomena, as tax offenses, the development of the grey economy, unfair competition, reduced state protection of individual rights and freedoms in economic activity. Limiting the activity of state by reducing it to protection of the basic freedoms of citizens does not necessarily mean simultaneous limiting the scope of social welfare. Voluntary cooperation and market activities of an economic nature should not be underestimated, because such activities supported by a private initiative will ensure sustainable economic development, and improve the overall standard of living in a given country. Countries that aim to build a social market economy, and at the same time limiting some business activities by legal institutions ensure sustainable socio-economic development. (original abstract)
  • Warsaw School of Economics, Poland
  • 2018 Index of Economic Freedom -
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