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Does Economic Freedom Encourage Entrepreneurship?

Does economic freedom promote entrepreneurship and growth? Economists Christian Bjørnskov and Nicolai J. Foss explore that potential connection in the Fraser Institute’s “Economic Freedom of the World: 2012 Annual Report,” examining how government overspending and unsound monetary policies inhibit entrepreneurial activity . Further, public spending crowds out entrepreneurs and their ability to innovate. As a result, it stunts economic growth across the country.

“Government enterprises, in particular, exert a strongly significant and sizeable negative effect on entrepreneurship. The same applies to sound money, which is also often negatively affected by governments trying to affect the economy and raise seignorage. Freely operating capital markets and predictable monetary circumstances clearly enable entrepreneurship.”

Read the rest of Professors Bjørnskov and Foss’s research here