The relationship between economic freedom and economic growth has always been frequently discussed in the economic literature. Economic freedom is often believed to enhance economic growth, which in turn creates more economic freedom. The first part of this paper studies the transition process in China and Vietnam from a planned economy to a free market economy. The transition process, which takes place over the period of more than two decades, allowing more economic freedom, and implementing some elements of a free market, has boosted the growth rate in both China and Vietnam, and increased considerably the standard of living of people in the two countries. China and Vietnam’s amazing achievements raise the question about what factors have contributed to the high economic growth rates of the two countries. The second part of the paper studies the relationship between economic freedom and economic growth, employing an empirical approach. The empirical research presents evidence to support the theory of the positive relationship between economic freedom and economic growth. It is concluded from the regression model that economic freedom has a significantly positive impact on economic growth, holding everything else constant.
Advisor(s) or Committee Chair
Professor William Davis
Economics | Social and Behavioral Sciences
Vu, Hanh T., "The Relationship between Economic Freedom and Economic Growth: The Transistion Process in Vietnam and China" (2010). Honors College Capstone Experience/Thesis Projects. Paper 257.