No. 33 — August 25, 2000


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Data Sources and Definitions

Raymond Gastil, Freedom in the World: Political Rights and Civil Liberties, 1986-1987 (New York, New York: Greenwood Press, 1987). Data available from the World Bank (June 24, 2000) at

Data on 148 countries.


  1. Measure of democracy.


James D. Gwartney, Robert Lawson and Walter Block, Economic Freedom of the World, 1975-95 (Vancouver, British Columbia: Fraser Institute, 1996).

Data on 103 countries.


  1. Average annual growth rate of money supply during the last five years minus potential growth rate of GDP.
  2. Standard deviation of annual inflation rate during the last five years.
  3. Freedom of citizens to own a foreign bank account domestically.
  4. Freedom of citizens to maintain a bank account abroad.
  5. Government general consumption expenditures as a share of gross domestic product.
  6. Role and presence of government-operated enterprises.
  7. Price controls or the extent to which businesses are free to set their own prices.
  8. Freedom of private businesses and cooperatives to compete in markets.
  9. Equality of citizens under the law and access of citizens to a nondiscriminatory judiciary.
  10. Freedom from government regulations and policies that cause negative interest rates.
  11. Government transfers and subsidies as a share of GDP.
  12. Top marginal tax rate and income at which it applies.
  13. Use of conscripts to obtain military personnel.
  14. Taxes on trade as a share of imports plus exports.
  15. Difference between official exchange rate and black market rate.
  16. Actual size of trade sector compared with expected size based on econometric estimates.
  17. Restrictions on freedom of citizens to engage in capital transactions with foreigners.


Kim Holmes, Bryan Johnson and Melanie Kirkpatrick (eds.), 1997 Index of Economic Freedom (Washington, D.C.: Heritage Foundation, 1997).

Data on 150 countries.


  1. Trade policy: average tariff rates and nontariff trade barriers.
  2. Taxation: average and marginal corporate and individual tax rates.
  3. Government intervention in the economy: government consumption as a share of GDP, plus the extent of government-owned enterprises.
  4. Monetary policy: inflation rate.
  5. Capital flows and foreign investment policy: restrictions on and treatment of foreign investors.
  6. Banking: openness and regulation of and restrictions on banking system to compete and provide services.
  7. Wage and price controls: degree to which markets or government sets wages and prices, including minimum wages and utility pricing.
  8. Property rights: degree to which private property is a guaranteed right, including the probability of expropriation and the adequacy of courts and the legal system to protect private property.
  9. Regulation: ease or difficulty in opening a business and keeping it open, including production limits, quotas and corruption.
  10. Black market: existence and size of black markets, smuggling and illegal workers.


Institute for Management Development, World Competitiveness Yearbook 1998 (Lausanne, Switzerland: 1998).

Data on 46 countries.


  1. Competitiveness index based on domestic economy, internationalization, government, finance, infrastructure, management, science and people.


Philip Keefer and Stephen Knack, "Institutions and Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, VII, No. 3, November 1995. Data available from the World Bank (June 24, 2000) at

Data on 115 countries averaged for 1982 to 1995.


  1. Corruption: likelihood that high government officials will demand special payments and that illegal payments are generally expected throughout lower levels of government in the allocation of import and export licenses, foreign exchange, tax assessments and credit.


Paolo Mauro, "Corruption and Growth," Quarterly Journal of Economics, CX, No. 3, August 1995.

Data on 68 countries.


  1. Legal system and judiciary: efficiency and integrity of legal environment as it affects business, particularly foreign firms.
  2. Bureaucracy and red tape: regulatory environment that foreign firms face when seeking approvals and permits and degree to which it represents an obstacle to business.
  3. Corruption: degree to which business transactions involve corruption or questionable payments.


Schlomo Angel and Stephen K. Mayo, Enabling Policies and Their Effects on Housing Sector Performance: A Global Comparison (Habitat II Conference) (Istanbul, Turkey: June 1996).

Data on 52 countries obtained from World Bank, Global Survey of Housing Indicators of 1990 (unpublished).


  1. Property rights index: compiled from items on restrictions on land and housing transactions, squatting and land registration.
  2. Housing finance regime: level of development of institutional and regulatory environment of housing finance system.
  3. Housing subsidies index: involvement of public sector in demand or supply subsidies.
  4. Property infrastructure index: government spending on roads, water, sewers, drainage and electricity, plus such other indicators as commute time and housing affordability.
  5. Regulatory regime index: measures impact of land-use flexibility, zoning and building code regulations as well as bureaucratic flexibility and efficiency.
  6. Industrial organization index: includes monopolization index for construction industry, restrictions on obtaining building materials and skilled worker availability.


Political Risks Services, Inc., International Country Risk Guide (Syracuse, New York: various years). Data available from the World Bank (June 24, 2000) at

Data on 81 countries.


  1. Rule of law.


Transparency International, 1998 Corruption Perception Index (Berlin, Germany: 1998).

Data on 85 countries compiled by combining data from at least three and up to seven international surveys.


  1. Corruption perception index: relates to perceptions of degree of corruption as seen by business people, risk analysts and general public.


World Bank, World Development Report 1998/99 (Washington, D.C.: 1999).

Data on 49 countries for 1995 and 1996.


  1. Creditor' rights: based on automatic stay on assets of distressed company, continuance of management and priority of secured creditors.
  2. Shareholders' rights: based on five indicators of shareholders' ability to protect the value of their assets.
  3. Enforcement: based on an assessment of the law and order tradition in the country and on the ability of government to unilaterally modify a contract.


World Economic Forum, Global Competitiveness Report 1998 (Geneva, Switzerland: 1999).

Data on 53 countries.


  1. Competitiveness index: compiled from eight subindices on openness, government, finance, infrastructure, technology, management, labor and institutions.
  2. Executive opinion survey: measured opinions of leading business executives about country in which they operate concerning the country's competitiveness and comparative strengths and weaknesses. More than 3,000 executives in 53 countries responded.

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