Unleashing Potential: How Economic Freedom Drives Growth in Developing Economies

BENLİ M., TAŞ H., EKİNCİ A.

World Economy, vol.49, no.4, pp.729-742, 2026 (SSCI, Scopus) identifier

  • Publication Type: Article / Article
  • Volume: 49 Issue: 4
  • Publication Date: 2026
  • Doi Number: 10.1111/twec.70057
  • Journal Name: World Economy
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, ABI/INFORM, EconLit, Geobase, Index Islamicus, Political Science Complete, Public Affairs Index, vLex
  • Page Numbers: pp.729-742
  • Keywords: economic freedom, economic growth, panel data models
  • Bilecik Şeyh Edebali University Affiliated: Yes

Abstract

This study analyzes the impact of economic freedom and economic growth in 51 developing countries for the period 2000–2021. Using panel cointegration and dynamic panel GMM estimators, we test whether institutional quality—as reflected by economic freedom—drives long-run income growth. The results indicate a persistent positive effect of economic freedom on GDP per capita, consistent across different estimation techniques. Investment also contributes positively to growth, while labor effects are more heterogeneous. These findings underscore the importance of institutional reforms that strengthen market efficiency and reduce regulatory barriers in sustaining economic growth across developing economies.