Different countries’ economies can be broken down into subsections based on a number of factors. One of these sections is based on their income. The first of which is lower-income economies. In these economies, the average income is at $1,035 or less. There are middle- income economies with incomes falling between $1,036 and $12,615. And lastly there are higher-income economies which bring in $12,616 or more. We have chosen to study and analyze economies in each income level: Kenya from the lower-income economy, Jamaica from the middle-income economy, and Netherlands from the higher-income economy. The information can be gathered from two different indexes: Economic Freedom and Doing Business.
Review of Indexes
The first of these two indexes is the Index of Economic Freedom. The Index of Economic Freedom is published each year by The Wall Street Journal and The Heritage Foundation. An economically free society, government only intervenes when necessary. Capital and goods is able to move freely without intervention from the government. This allows for a more successful society. The index measures economic freedom based on ten different factors which are grouped into “four pillars of economic freedom”. These “pillars of economic freedom” are: rule of law, limited government, regulator efficiency and open markets. The first subsection of rule of law is property rights. This is an evaluation of the ability of individuals to own private property and have these rights enforced by the state. The second subsection is freedom from corruption. Because corruption is detrimental to economic freedom by instituting instable relationships between economies, it is imperative that an economy remain free from it.
The second pillar, limited government is broken down into two subsections, the first being fiscal freedom. Fiscal freedom is “a measure of tax burden imposed by government,” (About the Index). The second subsection is government spending. This manipulates the level of government spending as a percentage of GDP.
The third pillar, regulatory efficiency, is broken down into three different subsections: business freedom, labor freedom, and monetary freedom. Business freedom is a measurement of the ease of “starting, operating and closing a business” (About the Index). A country’s business freedom is given a score of 0-100 with 100 being the most free business environment. Labor freedom measures various factors that create the basis of a country’s labor market. And lastly, monetary freedom is a measure of price stability that takes into account factors such as inflation and other price controls.
The final pillar is open markets which can be broken down into: trade freedom, investment freedom, and financial freedom. Trade freedom is the ability for a country to import and export goods without tariff or other barriers present. Investment freedom allows firms and businesses to freely move their capital without constraints. And lastly...