A quarter of a century has passed since Michael Walker and the Fraser Institute first partnered with Milton and Rose Friedman on the Economic Freedom of the World (EFW) project. At the onset, the sole objective of this project was to clearly define and measure the consistency of institutions and policies affecting economic freedom for a large set of countries and territories.
In the past three decades, a comprehensive measure of economic freedom has been developed using 42 variables to measure economic freedom in five broad areas including Size of Government, Legal System and Property Rights, Sound Money, Freedom to Trade Internationally and Regulation. Among the five indexes, freedom to trade demonstrates the degree to which countries and individuals are able to exchange on a voluntary basis. The freedom to trade is designed to measure a wide variety of restraints and controls such as tariffs, quotas, hidden administrative restraints and controls on exchange rates and capital. Lower restraints and controls lead to a higher degree of freedom in trade, and greater prosperity and stability.
Today that freedom remains challenged on many fronts, both politically and socially. People often take for granted that the government and special interest groups decide their nation’s trade policies. As a result, protectionism often succeeds, leading to lower global efficiency and a loss to welfare for both domestic and foreign consumers. Freer trade creates a more prosperous and peaceful world. As a network of 400 think tanks in more than 80 countries, Atlas calls for every NGO, trade expert, business leader, and individual to strengthen their efforts in promoting the benefits of free trade.
Why free trade?
Trade drives economic growth. Free trade enables different individuals and regions to specialize and compete, leading to greater productivity, lower prices and more innovation. Competition from trade has blessed families around the globe with lower prices, greater choice, and better quality. Because of trade, consumers pay lower prices for food, clothing, shoes, electronics, and cars, which translates directly into higher real incomes. This web of interactions and the mutual benefits from trade help to foster peace, as they create a basis for global interdependence.
The successes from trade liberalization are unmistakable Global merchandise trade has soared to 240 times the 1950 level. Elimination of tariffs and other protective barriers have created economic benefits for developing countries. In fact, removing these restrictions has created an estimated $200 billion per year and lifted at least 500 million people out of poverty over the past 15 years. A review of historical examples, such as the Netherlands in the 18th century, Great Britain during the 19th century, the United States in the past hundred years, proves that freer trade policies lead to prosperity. Free trade recognizes the economic right of every individual and brings about global prosperity, strengthening peaceful relations among nations.