Is economic freedom “contagious”?


It’s already late evening, so I won’t have a chance to read the Cato Institute’s latest Economic Freedom of the World report until tomorrow evening. Here’s their blurb:

Economic freedom in one country can spread to another and when neighboring countries implement simultaneous reforms to encourage economic freedom the impact is broader…

Using spatial econometric models, the study’s authors [Russell S. Sobel and Peter T. Leeson] concluded that “while changes in the economic freedom in one country have only a modest impact on neighboring countries, when multiple neighbors experience simultaneous changes in economic freedom, the impact is much greater. Thus broad regional changes in freedom can and do have significant impacts on surrounding countries.”

My gut reaction to this claim is skepticism, but I don’t strongly hold that prior belief, as I’ve never thought about this topic before. I’ll have to check out their work and post an update later in the week.