Constitutional Political Economy

, Volume 11, Issue 3, pp 265–279 | Cite as

Constitutional Choice and Prosperity: A Factor Analysis

  • Martin Leschke


Forempirical purposes most studies on the influence of freedom on prosperity across nations use either aggregate measuresof economic freedom combined with a measure of political liberty,or single components of these aggregates to describe the freedom-variable.For a scholar of constitutional economics, both these approachesdo not seem to be satisfactory. From his theoretical viewpointhe would favor an approach that focuses on properties of thepolitico-economic order that can be interpreted as appropriateconstraints for preferred outcomes. Factor analysis is the methodused in this paper to extract from a pool of components thatdescribe freedom two main factors, namely (1) the appropriatenessof the framework in which the market operates, and (2) the degreeof political interventions into the market process. It is shownthat these two factors have great influence on the prosperityof nations.


Great Influence Single Component Economic Freedom Market Process Prefer Outcome 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Barro, R. J. (1996) "Democracy and Growth." Journal of Economic Growth 1: 1–27.Google Scholar
  2. Buchanan, J. M. (1975) The Limits of Liberty: Between Anarchy and Leviathan. Chicago: University of Chicago Press.Google Scholar
  3. Buchanan, J. M. (1995) "Individual Rights, Emergent Social States, and Behavioral Feasibility." Rationality and Society 7: 141–50.Google Scholar
  4. Buchanan, J. M., and Congleton, R. (1998) Politics by Principle, Not Interest: Towards Nondiscriminatory Democracy. Cambridge: Cambridge University Press.Google Scholar
  5. Easton, S., and Walker, M. (1997) "Income, Growth, and Economic Freedom." American Economic Review 87: 328–33.Google Scholar
  6. Eliezer, B., and Karras, G. (1998) "Components of Economic Freedom and Growth: An Empirical Study." Journal of Developing Areas 32: 327–38.Google Scholar
  7. Esposto, A. G., and Zaleski, P. A. (1999) "Economic Freedom and the Quality of Life: An Empirical Analysis." Constitutional Political Economy 10: 185–97.Google Scholar
  8. Eucken, W. (1952) Grundzüge der Wirtschaftspolitik. Tübingen: Mohr (Siebeck).Google Scholar
  9. Fischer, S. (1981) "Towards an Understanding of the Costs of Inflation II." Carnegie-Rochester Conference on Public Policy 15: 5–41.Google Scholar
  10. Freedom House (1996) Freedom in the World: The Annual Survey of Political Rights & Civil Liberties, 1995–1996. New Brunswick: Freedom House and Transaction Publishers.Google Scholar
  11. Freedom House (1998) Freedom in the World: The Annual Survey of Political Rights & Civil Liberties, 1997–1998. New Brunswick: Freedom House and Transaction Publishers.Google Scholar
  12. Friedman, M. (1988) "A Statistical Note on the Gastil-Wright Survey of Freedom." In: Walker, M. A. (ed.) Freedom, Democracy and Economic Welfare. Vancouver: Fraser Institute.Google Scholar
  13. Gwartney, J., Lawson, R., and Block, W. (1996) Economic Freedom of the World, 1975–1995. Vancouver: Fraser Institute.Google Scholar
  14. Gwartney, J., and Lawson, R. (1998) Economic Freedom of the World, 1998 Report. Vancouver: Fraser Institute.Google Scholar
  15. Hanke, S. H., and Walters, S. J. K. (1997) "Economic Freedom, Prosperity, and Equality: A Survey." Cato Journal 17: 117–46.Google Scholar
  16. Hayek, F. A. (1960) The Constitution of Liberty. Chicago: University of Chicago Press.Google Scholar
  17. Hayek, F. A. (1973–79) Law, Legislation and Liberty, 3 vols. Chicago: University of Chicago Press.Google Scholar
  18. Knack, S., and Keefer, P. (1995) "Institutions and Economic Performance: Cross Country Tests Using Alternative Institutional Measures." Economics and Politics 7: 207–27.Google Scholar
  19. North, D. C. (1981) Structure and Change in Economic History. New York: W. W. Norton & Company.Google Scholar
  20. North, D. C. (1990) Institutions, Institutional Change and Economic Performance. New York: Cambridge University Press.Google Scholar
  21. Olson, M. (1982) The Rise and the Decline of Nations. New Haven-London: Yale University Press.Google Scholar
  22. Pejovich, S. (1998) "Toward a Theory of the Effects of the Interaction of Formal and Informal Institutions on Social Stability and Economic Development." Freiburg Discussion Papers on Constitutional Economics 98=2. University of Freiburg.Google Scholar
  23. Romer, P. M. (1986) "Increasing Returns and Long-Run Growth." Journal of Political Economy 94: 1002–37.Google Scholar
  24. Solow, R. M. (1956) "A Contribution to the Theory of Economic Growth." Quarterly Journal of Economics 70: 65–94.Google Scholar
  25. United Nations Development Project (1999) Human Development Report 1999: Getty Center for Education in the Arts.Google Scholar
  26. Vanberg, V. (1999) "Markets and Regulation. On the Contrast between Free-Market Liberalism and Constitutional Liberalism." Constitutional Political Economy 10: 219–43.Google Scholar
  27. Voigt, S. (1998) "Making Constitutions Work: Conditions for Maintaining the Rule of Law." Cato Journal 18: 191–208.Google Scholar
  28. Weingast, B. (1993) "Constitutions as Governance Structures: The Political Foundations of Secure Markets." Journal of Institutional and Theoretical Economics 149: 286–311.Google Scholar
  29. World Bank (1998) World Development Indicators 1998. Washington, D.C.Google Scholar

Copyright information

© Kluwer Academic Publishers 2000

Authors and Affiliations

  • Martin Leschke
    • 1
  1. 1.Department of EconomicsUniversity of MünsterMünsterGermany

Personalised recommendations