Skip to main content


Log in

Does economic freedom enhance quality of life in Africa?

  • Research Article
  • Published:
International Review of Economics Aims and scope Submit manuscript


This paper examines the role that the level and changes in economic freedom play in promoting quality of life in Africa over the period 1985–2016. It develops a composite index for quality of life to capture the different dimensions of quality of life. Employing the generalised method of moments (GMM) estimation technique, the results indicate a positive effect of economic freedom on the quality of life. However, change in economic freedom has an inverse relationship with the quality of life in Africa. The GDP growth and foreign aid have positive effects on the quality of life index and its various indicators. The findings highlight the need for African countries to establish fiscal and monetary policies suitable for improving economic freedom. It also emphasizes the need for African countries to reduce international trade barriers and open up African economies to foreign trade. This will bring about increased economic growth and improved quality of life.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Fig. 1

Source: Author’s Construct, 2021; Data sourced from EFW, Fraser Institute

Fig. 2

Source: Author’s Computation, 2021, Data sourced from EFW, Fraser Institute

Fig. 3

Source: Author’s Construct, 2021. Data sourced from WDI of World Bank

Fig. 4

Source: Author’s Construct, 2021. Data sourced from WDI, World Bank

Fig. 5

Source: Author’s Computation, 2021, Data sourced from EFW, Fraser Institute

Fig. 6

Source: Author’s Computation, 2021, Data sourced from WDI, World Bank

Fig. 7

Source: Author’s Computation, 2021, Data sourced from WDI, World Bank

Fig. 8

Source: Author’s Computation, 2021, Data sourced from WDI, World Bank and EFW, Fraser Institute

Fig. 9

Source: Author’s Computation, 2021, Data sourced from WDI, World Bank and EFW, Fraser Institute

Similar content being viewed by others


  • Acemoglu D and Robinson J (2008). The role of institutions in growth and development. commission on growth and development working paper No. 10. The World Bank, Washington, DC

  • Acemoglu D, Johnson S and Robinson JA (2004). Institutions as the fundamental cause of long-run growth. NBER Working Paper 10481

  • Ahmad M (2017) Economic freedom and income inequality: does political regime matter? Economies 5(18):1–28

    Google Scholar 

  • Aixala J, Fabro G (2009) Economic freedom, civil liberties, political rights and growth: a causality analysis. SpanEconRev 11(3):165–178

    Article  Google Scholar 

  • Ali A, Crain W (2001) Political regimes, economic freedom, institutions and growth. J Public Finance Public Choice 19(1):3–22

    Article  Google Scholar 

  • Aron J And Muellbauer J (2000). Financial Liberalization, Consumption, and Debt in South Africa. WPS 2000–22

  • Arora V, Vamvakidis G (2006) The impact of US economic growth on the rest of the world: how much does it matter? J Econ Integration 21(1):21–39

    Article  Google Scholar 

  • Asandului L, Iacobuta A, Cautisanu C (2016) Modeling economic growth based on economic freedom and social progress. Eur J Sustain Dev 5(3):229–238

    Google Scholar 

  • Azman-Saini W, Baharumshah A, Law S (2010) Foreign direct investment, economic freedom and economic growth: international evidence. Econ Model 27(5):529–545

    Article  Google Scholar 

  • Bauman Z (1997) Freedom. World View, New Delhi

    Google Scholar 

  • Belasen AR, Hafer RW (2012) Well-being and economic freedom: evidence from the States. Intelligence 40(3):306–316

    Article  Google Scholar 

  • Belasen AR, Hafer RW (2013) Do changes in economic freedom affect well-being? J Regional Anal Policy 43(1):56–64

    Google Scholar 

  • Belk RW (1988) Possessions and the extended self. J Consum Res 15(September):139–168

    Article  Google Scholar 

  • Bennett DL, Cebula RJ (2015) Misperceptions about capitalism, government and inequality. In: Cebula RJ, Hall JC, Mixon F, Payne JE (eds) Economic behavior, entrepreneurship and economic freedom. Edward Elgar, Amsterdam

    Google Scholar 

  • Berggren N, Jordahl H (2006) Free to trust: economic freedom and social capital. Kyklos 59(2):141–169

    Article  Google Scholar 

  • Bjørnskov C (2015) Does economic freedom really kill? on the association between ‘Neoliberal’ policies and homicide rates. Eur J Polit Econ 37:207–219

    Article  Google Scholar 

  • Bjørnskov C, Dreher A, Fischer JAV (2007) The bigger the better? evidence of the effect of government size on life satisfaction around the world. Public Choice 130:267–292

    Article  Google Scholar 

  • Blume L, Voigt S (2007) The economic effects of human rights. Kyklos 60(4):509–538

    Article  Google Scholar 

  • Blundell-Wignall A, Browne F, and Cavaglia S (1991) Financial liberalisation and consumer behaviour. OECD Economics Department Working Papers No. 81. OECD

  • Bourguignon F, Morrisson C, (2002) Inequality Among World Citizens: 1820–1992. Am Econ Rev 92(4):727–744

  • Breitung J (2000) The Local Power of Some Unit Root Tests for Panel Data. In: Baltagi B (ed) Nonstationary panels, panel cointegration, and dynamic panels, advances in econometrics. Elsevier, Bingley, pp 161–178

    Chapter  Google Scholar 

  • Carlsson F, Lundstrom S (2002) Economic freedom and growth: decomposing the effects. Public Choice 112:335–344

    Article  Google Scholar 

  • Cebula R (2011) Economic growth, ten forms of economic freedom, and political stability: an empirical study using panel data, 2003–2007. J Private Enterprise. 26(2), Spring: 61–82

  • Cebula RJ (2013) Which economic freedoms influence per capita real income? Appl Econ Lett 20(4):368–372

    Article  Google Scholar 

  • Cebula R, Mixon F (2012) The impact of fiscal and other economic freedoms on economic growth: an empirical analysis. Int Adv Econ Res 18(2):139–150

    Article  Google Scholar 

  • Chen S and Ravallion M (2007) Absolute poverty measures for the developing world, 1981–2004. Policy research working paper 4211. (Washington, DC: World Bank)

  • Chen S, Ravallion M (2008) The developing world is poorer than we thought, but no less successful in the fight against poverty. poverty research paper No. 4703. World Bank, Washington, DC

    Google Scholar 

  • Chirino JB, Melian JMB (2006) Analysis of the effectiveness of official development assistance. Int Res J Finance Econ 3:1450–2887

    Google Scholar 

  • Cole JH (2003) The contribution of economic freedom to world economic growth: 1980–99, vol 23(2). Cato Journal, Cato Institute, pp 189–198

  • Conway T (2004) Trade liberalisation and poverty reduction. A study funded by department for international development, UK, under contract CNTR 03 4777. London: Overseas Development Institute

  • Corbi RE (2007) The components of economic freedom, income and growth: an empirical analysis. Estudos Econômicos (São Paulo) 37(3):515–545

  • Dawson JW (1998) Institutions, investment, and growth: new cross-country and panel data evidence. Econ Inq 36(4):603–619

    Article  Google Scholar 

  • de Haan J, Siermann CLJ (1998) Further evidence on the relationship between economic freedom and economic growth source. Public Choice 95(3/4):363–380

    Article  Google Scholar 

  • de Haan J, Sturm J (2000) On the relationship between economic freedom and economic growth. Eur J Polit Econ 16(2):215–241

    Article  Google Scholar 

  • De Soysa I, Fjelde H (2010) Is the hidden hand an iron fist? capitalism and civil peace, 1970–2005. J Peace Res 47(3):287–298

    Article  Google Scholar 

  • Dollar D, Kraay A (2002) Growth is good for the poor. J Econ Growth 7:195–225

    Article  Google Scholar 

  • The Economist (2007) Economic freedom in Africa: where has all the progress gone? available at: Accessed 4th April 2019

  • EFA Global Monitoring Report (2006) Education for all: literacy for Life. UNESCO, France

    Google Scholar 

  • Esposto AG, Zaleski PA (1999) Economic freedom and the quality of life: an empirical analysis. Const Polit Econ 10:185–197

    Article  Google Scholar 

  • Featherstone M (1991) Consumer culture and postmodernism. Sage, London

    Google Scholar 

  • Felce D, Perry J (1995) Quality of life: its definition and measurement. Res Dev Disabil 16(1):51–74

    Article  Google Scholar 

  • Feldmann H (2007) Economic freedom and unemployment around the world. South Econ J 74(1):158–176

    Article  Google Scholar 

  • Feldmann H (2017) Economic freedom and human capital investment. J Inst Econ 13(2):421–445

    Google Scholar 

  • Feldmann H (2020) Economic freedom and people’s regard for education. Soc Indic Res.

    Article  Google Scholar 

  • Fiske J (2000) Shopping for pleasure Malls, power, and resistance. In: Juliet BS, Douglas BH (eds) The consumer society reader. The New Press, New York, pp 306–328

    Google Scholar 

  • Gehring K (2013) Who benefits from economic freedom? Unraveling the effect of economic freedom on subjective well-being. World Dev 50:74–90

    Article  Google Scholar 

  • Graafland J (2020a) Contingencies in the relationship between economic freedom and human development: the role of generalized trust. J Inst Econ 16(3):271–286

    Google Scholar 

  • Graafland J (2020b) When does economic freedom promote well being? on the moderating role of long-term orientation. Soc Indic Res 149:127–153

    Article  Google Scholar 

  • Graafland JJ and Compen B (2012) Economic freedom and life satisfaction: a cross country analysis, Discussion Paper 2012-038, Tilburg University, Center for Economic Research

  • Graafland JJ, Compen B (2014) Economic freedom and life satisfaction: mediation by income per capita and generalized trust. J Happiness Stud 16(3):789–810

    Article  Google Scholar 

  • Graafland J, Lous B (2018) Economic freedom, income inequality and life satisfaction in OECD countries. J Happiness Stud 19:2071–2093

    Article  Google Scholar 

  • Graafland J, Noorderhaven N (2020) Culture and institutions: how economic freedom and long-term orientation interactively influence corporate social responsibility. J Int Bus Stud 51:1034–1043

    Article  Google Scholar 

  • Gropper DM, Lawson RA, Thorne JT Jr (2011) Economic freedom and happiness. Cato J 31:237–255

    Google Scholar 

  • Grubel HG (1998) Economic Freedom and Human Welfare: Some Empirical Findings. Cato J 18(2):287–304

    Google Scholar 

  • Gwartney JD, Connors JS (2010) Economic freedom and global poverty. In: White MD (ed) Accepting the invisible hand perspectives from social economics. Macmillan, New York, pp 43–68

    Chapter  Google Scholar 

  • Gwartney J, Lawson R (2004b) Ten consequences of economic freedom.NCPA policy report No. 268. National Centre for Policy Analysis, Texas

    Google Scholar 

  • Gwartney J and Lawson R (2004) Economic freedom of the world: 2004 annual report. Vancouver: The Fraser Institute, 2004. Data retrieved from

  • Gwartney J, Lawson R (2008) Economic freedom of the world: 2008 annual report. Fraser Institute, Vancouver

    Google Scholar 

  • Gwartney JD, Holcombe R, Lawson R (1999) Economic freedom and the environment for economic growth. J Inst Theor Econ 155(4):643–663

    Google Scholar 

  • Gwartney JD, Holcombe RG, Lawson RA (2004) Economic freedom, institutional quality, and cross-country differences in income and growth. Cato J 24(3):205–233

    Google Scholar 

  • Gwartney J, Holcombe R, Lawson R (2006) Institutions and the impact of investment on growth. Kyklos 59(2):255–273

    Article  Google Scholar 

  • Gwartney J, Lawsonm R and Hall J (2017). Economic freedom of the world: 2017 annual report. Fraser Institute. Available on Accessed on 3/2/2019

  • Hall J, Sobel R, Crowley G (2010) Institutions, capital, and growth. South Econ J 77(2):385–405

    Article  Google Scholar 

  • Hassan R, Quibria MG, Kim Y (2003) Poverty and economic freedom: Evidence from cross-country data. East-West Centre Working Paper no 60

  • Heckelman J (2000) Economic freedom and economic growth: a short-run causal relationship. J Appl Econ 3(1):71–91

    Article  Google Scholar 

  • Heckelman J, Knack S (2009) Aid, economic freedom, and growth. Contemp Econ Policy 27(1):46–53

    Article  Google Scholar 

  • Heckelman J, Stroup M (2000) Which economic freedoms contribute to economic growth? Kyklos 3(4):527–544

    Article  Google Scholar 

  • Heller L, Stephenson E (2014) Economic freedom and labor market conditions: evidence from the states. Contemp Econ Policy 32(1):56–66

    Article  Google Scholar 

  • Helliwell JF, Huang H (2008) How′s your government? International evidence linking good government and well-being. Br J Polit Sci 38(4):595–619

  • Ho CSF, Amir K, Nasaruddin LS, Abidin NFZ (2013) Openness, Market Size and Foreign Direct Investments. In: Hooy CW, Ali R, Rhee SG (eds) Emerging Markets and Financial Resilience. Macmillan, London

    Chapter  Google Scholar 

  • Hussain ME, Haque M (2016) Impact of economic freedom on the growth rate: a panel data analysis. Economies 4(5):1–15

    Google Scholar 

  • Inglehart R, Foa R, Peterson C, Welzel C (2008) Development, freedom, and rising happiness. Perspect Psychol Sci 3:264–285

    Article  Google Scholar 

  • Islam S (1996) Economic freedom, per capita income and economic growth. Appl Econ Lett 3(9):595–597

    Article  Google Scholar 

  • Islam MdR (2018) Wealth inequality, democracy and economic freedom. J Comp Econ.

    Article  Google Scholar 

  • Jonker G, Harmsen J (2012) Structuring of sustainability context. Gerald jonker and jan harmen engineering for sustainability. Elsevier, New York, pp 35–60

    Google Scholar 

  • Kaur S (2007) Economic freedom, inequality and poverty: re-examining the role of government. Indian Econ J 55(2):96–118

    Article  Google Scholar 

  • Kimenyi M, Adibe J, Djiré MA. Jirgi J, Kergna A, Deressa TT, Pugliese JE and Westbury A (2014). The impact of conflict and political instability on agricultural investments in Mali and Nigeria. Africa Growth Initiative Working Paper 17. Washington: Brookings

  • King EM, Montenegro CE, Orazem PF (2012) Economic freedom, human rights, and the returns to human capital: an evaluation of the schultz hypothesis. Econ Dev Cult Change 61(1):39–72

    Article  Google Scholar 

  • Labrie Y, Doucet B (2015) Economic freedom improves Human well-being. Economic Notes. Montreal QC, Montreal Economic Institute

  • Levchenko AA (2005) Financial liberalization and consumption volatility in developing countries. IMF Staff Pap 52(2):237–259

    Google Scholar 

  • Levin A, Lin CF, Chu CSJ (2002) Unit root tests in panel data: asymptotic and finite-sample properties. J Econometrics 108:1–24

    Article  Google Scholar 

  • Linnemann L (2006) The effect of government spending on private consumption: a puzzle? J Money, Credit Bank 38(7):1715–1735

    Article  Google Scholar 

  • Liu B (1976) Social quality of life indicators for small metropolitan areas in America. Int J Soc Econ 3(3):198–213

  • McCall S (1975) Quality of life. Soc Indic Res 2(2):229–248

  • Madan, A. (2002). The relationship between economic freedom and socio-economic development. Honors Projects, Paper 37. Available at

  • Maddala G, Wu S (1999) A comparative study of unit root tests and a new simple test. Oxford Bull Econ Stat 61:631–652

    Article  Google Scholar 

  • Masud N and Yontcheva B (2005). Does foreign aid reduce poverty? empirical evidence from nongovernmental and bilateral aid. IMF Working Paper 05/100

  • Miller AJ, Holmes KR, Feulner EJ (2012) Index of economic freedom. The wall street journal. Dow Jones and Company Inc., New York

    Google Scholar 

  • Mir Nahid, M. and Mansur A (2012). Government expenditure and household consumption in Bangladesh through the lens of economic theories: an empirical assessment. MPRA Paper No. 36016. Available at

  • Mixon JW Jr, Roseman GH (2003) Male-female life expectancy and economic freedom. J Private Enterprise 19(1):1–25

    Google Scholar 

  • Muslija A, Satrovic E (2018) Economic freedom matters for human capital: evidence from Turkey. Int J New Trends Sci, Eng Technol 1(1):1–10

    Google Scholar 

  • N’zue FF (2011) Economic freedom and performance in ECOWAS countries: a dynamic panel data approach. Int J Econ Policy Emerg Econ 18(2):53–78

    Google Scholar 

  • Naanwaab C (2018) Does economic freedom promote human development? new evidence from a cross-national study. J Dev Areas 52(3):184–198

    Article  Google Scholar 

  • Nikolaev B (2014) Economic freedom and quality of life: evidence from the OECD’s your better life index. J Priv Enterp 29(3):61–96

    Google Scholar 

  • North DC (1990) Institutions, institutional change, and economic performance. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Norton S (1998) Property, property rights, and human well-being: a crossnational study. Cato J 18(2):233–245

    Google Scholar 

  • Okpala AO, Okpala CO (2017) Index of economic freedom, religion and female literacy rate in sub-Saharan Africa. J Soc Sci Res 3(4):33–36

    Google Scholar 

  • Olofin OP (2013) Foreign aid and poverty level in West African countries: new evidence using a heterogeneous panel analysis. Australian J Bus Manag Res 3(04):9–18

    Article  Google Scholar 

  • Ovaska T, Takashima R (2006) Economic policy and the level of self perceived well-being: an international comparison. J Socio-Econ 35:308–325

    Article  Google Scholar 

  • Ott JC (2010) Good governance and happiness in nations: Technical quality precedes democracy and quality beats size. J Happiness Stud 11(3):353–368

  • Pedroni P (1999) Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bull Econ Stat 61:653–670

    Article  Google Scholar 

  • Pedroni P (2004) Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP Hypothesis. Econ Theory 20:597–625

    Article  Google Scholar 

  • Perez-Moreno S, Angulo-Guerrero MJ (2016) Does economic freedom increase income inequality? Evidence from the EU countries. J Econ Policy Reform 19(4):327–347

    Article  Google Scholar 

  • Press D (2017) Why economic freedom is the best weapon against poverty. competitive enterprise institute. Available at: Accessed on 24th April 2019

  • Quazi R (2007) Economic freedom and foreign direct investment in East Asia. J Asia Pacific Econ 12(3):329–344

    Article  Google Scholar 

  • Ritzer G (2004) Enchanting a disenchanted world: revolutionizing the means of consumption, 2nd edn. Pine Forge, Thousand Oaks

    Google Scholar 

  • Rokicka E (2014) The concept of ‘Quality of Life’ in the context of economic performance and social progress. In: EiBel D, Rokicka E, Leaman J (eds) Welfare State at Risk. Springer, Cham

  • Scully GW (2002) Economic freedom, government policy and the trade-off between equity and economic growth. Public Choice 113:77–96

    Article  Google Scholar 

  • Singh D, Gal Z (2020) Economic freedom and its impact on foreign direct investment: global overview. Rev Econ Perspectives 20(1):73–90

    Article  Google Scholar 

  • Stroup M (2007) Economic freedom, democracy, and the quality of life. World Dev 35(1):52–66

    Article  Google Scholar 

  • Terhune KW (1973) Probing policy relevant questions on the quality of life. In: The quality of Life concept, Environmental Protection Agency, Washington, USA

  • Thorbecke E (2013) The interrelationship linking growth, inequality and poverty in sub- Saharan Africa. J African Econ 22(Supplement 1):i15–i48

    Article  Google Scholar 

  • Tsai MC (2009) Market Openness, Transition Economies and Subjective Wellbeing. J Happiness Stud 10(5):523–539

  • UNDP (2018) 2018 Human development report. UN Publishing, New York

    Google Scholar 

  • Vargas Llosa A (2008) Lessons from the Poor: triumph of the Entrepreneurial Spirit. Independent Institute, Oakland

    Google Scholar 

  • Veenhoven R (2000a) The four qualities of life ordering concepts and measures of the good life. J Happiness Stud 1:1–39

    Article  Google Scholar 

  • Veenhoven R (2000b) Freedom and happiness: a comparative study in 46 nations in the early 1990s. In: Diener E, Suh EM (eds) Culture and Subjective Well-being. MIT Press, Cambridge, MA, pp 257–288

    Google Scholar 

  • Vega-Gordillo M, Álvarez-Arce JL (2003) Economic growth and freedom: a causality study. Cato J 23(2):199–215

    Google Scholar 

  • Verme P (2009) Happiness, freedom and control. J Econ Behav Organ 71(2):146–161

    Article  Google Scholar 

  • WHOQOL Group (1995). Measuring quality of life. social_monitoring/social_indicators/EU_Reporting/index.htm

  • World Bank (2016) Poverty in a rising Africa. Africa poverty report, world bank, Washington, DC

    Google Scholar 

  • World Bank (2018) Poverty and shared prosperity 2018: piecing together the poverty puzzle. World Bank, Washington, DC

    Google Scholar 

  • Yakubu Z, Loganathan N, Mursitama TN, Mardani A, Khan SAR, Hassa AAG (2020) Financial liberalisation, political stability, and economic determinants of real economic growth in Kenya. Energies 13:34–50

    Article  Google Scholar 

  • Zaman K, Saleem MQ, Ahmad M, Khan A (2017) Economic freedom indicators and higher education reforms: evaluation and planning internationalization process. Int J Econ Financial Issues 7(3):152–160

    Google Scholar 

Download references


The authors wish to thank the anonymous reviewers for their very helpful comments and feedback on this article. The views in this paper are the authors’ and do not necessarily represent those of the affiliated institutions.


This article does not receive any funding.

Author information

Authors and Affiliations


Corresponding author

Correspondence to Olalekan Charles Okunlola.

Ethics declarations

Conflict of interest

The authors declare that they have no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.


Appendix 1

List of 44 African countries used





Burkina faso



Cabo verde

Central African republic

Dr Congo

Congo republic

Cote d'ivoire







Guinea Bissau


















Seirra Leone

South Africa








Appendix 2

For stationarity tests, the study uses a broad range of panel unit root tests: the LLC (Levin, Lin and Chu, 2002), the IPS (Im, Pesaran and Shin., 2003), and the ADF- and PP-Fisher Chi-square (Maddala and Wu, 1999) and Breitung’s (2000) t-statistic. As shown in Table 1, the results of the stationarity test show that out of the ten variables tested, five of the series are stationary at a level, while five are stationary at first difference. Next, we perform co-integration tests among variables used in the models estimated.

Appendix 3

Pedroni examines properties of residual-based tests for the null hypothesis of no co-integration for dynamic panels’ variables wherein both the short-run dynamics and the long-run slope coefficients are allowed to be heterogeneous across individual members of the panel. Pedroni puts into consideration both pooled within dimension tests and group mean between dimension tests. The test results in Table 2 show seven test statistics for each model estimated, consisting of Panel-v, Panel-rho, Panel-PP, Panel-ADF, Group-rho, Group-PP, and Group-ADF. The co-integration results presented in Table 2 are for models with quality of life as dependent variable. The result in Table 2 shows that with intercept and trend, five of the test statistics accept the null hypothesis of no co-integration, while six of the test statistics reject the null hypothesis of no co-integration, meaning that there is co-integration among the variable in the models.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Okunlola, O.C., Akinlo, A.E. Does economic freedom enhance quality of life in Africa?. Int Rev Econ 68, 357–387 (2021).

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI:


JEL Classification