Author: Vlastimil Vilímek | Prague on 13.03.2024

While entrepreneurs traditionally seek profits and business growth, economic freedom influences the conditions and environment in which these investments thrive.

Western countries, such as Switzerland or New Zealand, often excel in both areas, offering both financial stability and a high degree of economic freedom.

Unpredictable government policies and insufficient protection of property rights can lead to uncertainty and investment loss.

The Czech Republic ranked 17th in the index of economic freedom, ahead of Japan at 20th place, Germany at 23rd place, Austria at 28th place, and France even at 47th place!

Conversely, countries with lower levels of economic freedom, such as Venezuela or Zimbabwe, face challenges in building a thriving investment environment.

Restrictions on property rights and political regime uncertainty can deter potential investors and reduce the attractiveness of these markets.

Considering economic freedom can be crucial when deciding where to allocate investments.

For example, ETFs like the Freedom 100 Emerging Markets ETF (CBOE: FRDM) utilize economic freedom metrics to identify potentially attractive markets.

In light of recent events, such as Chinese regulation of technology companies or the Russian invasion of Ukraine, it is evident that political and economic factors have a significant impact on market performance.

For instance, in the Fraser Index of Freedom ranking 165 countries, Singapore ranked 1st, Russia 104th, and China even 111th.

Entrepreneurs should carefully balance their investments across different regions and consider both financial and non-financial factors, such as economic freedom, when deciding on their business models.

Very interesting reading of the Fraser Institute’s annual report on the World Economic Freedom Index:

Fraser Institute research is conducted by institute employees and affiliated scholars, academics, economists, and policy analysts from around the world.

The institute’s roster of research personnel has grown to over 350 authors (including six Nobel laureates) from 22 countries.”

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