Monetary freedom derived
from concepts of monetary economics, a discipline that permits to analyse money
as a medium of exchange, a valuable unit and a cost unit and monetarism, the
control of the government on current money. The monetary freedom level of a
country can be measured by: the price stability (inflation) and the price
Inflation: is monetary phenomenon, an increase in the
general price level for buying goods and service. It can happen within a
certain period of time. Its effect is a loss of money value. Basically, it
means ”too much money chasing too few goods.”
Price control: is when the government decides to limit
prices of goods in the market. Monetary freedom is a combination of these two
Monetary freedom is the condition in which there is
price stability but no interference from government.
Inflation and price control may lead to significant
consequences and distortion of market activity.
In order to have monetary freedom, government’s function
should be to safeguard property rights, maintain price stability, fight
inflation so that markets can expand.
Trade freedom is a key ingredient of economic freedom.
It is a policy in which governments of countries don’t dictate restrictions or
trade barriers in importing and exporting services or goods between countries. Trade
freedom is fundamental nowadays since the communication and transportation
through high technology become more and more easier. Most of the products produced
by a country involves contacts with foreign countries or the need of resources
from abroad. It contributes to the economic prosperity of a country.
Some policies, such as protectionism, have been
developed in order to limit the exchange between countries and protect their
Trade freedom index in a country can be perceived by
trade-weighted average tariff: (quantitative measure)
NTBs = Non- tariff barrier: (quantity restrictions,
prices restrictions, regulatory, customs restrictions and direct government
intervention) they impede the trade not only imposing tariffs.
Some trade policies not only support economic growth,
but also support the protection of property rights.
The investment Freedom permits people and
organizations to invest or move capitals without any limitation both within the
society and out of country’s borders.
Some factors may influence the investment freedom:
Political and security conditions
These conditions restrict the freedom of investors. Therefore,
most countries impose restrictions such as restrictions on payments, capital
transactions. Some other countries might want not to invest in a foreign