Martin KrauseProfessor of Economics

ESEADE Graduate School and University of Buenos Aires

Where possession has no stability, there must be perpetual war. Where property is not transferred by consent, there can be no commerce. Where promises are not observed, there can be no leagues nor alliances

David Hume (1711-1776)

Competition between monopolies The Tiebout effect Exit & voice Competition fuels evolution

◦ Reason brings variation◦ Evolution brings selection

“Race to the bottom”

Competitive actions are negative externalities for other governments

Harmonization

Rule of Law, World Bank Voice & Accountability, World Bank Perception of Corruption, Transparency

International Freedom of the press, Freedom House Doing Business, World Bank Global Competitiveness, World Economic Forum Economic Freedom of the World, Fraser

Institute Economic Freedom, Wall Street Journal/Heritage

Foundation

Rank Country Rank 2008 Rank 20071 Denmark 1 22 Switzerland 6 13 New Zealand 2 44 Finland 3 35 Iceland 4 56 Canada 9 117 Ireland 10 128 Netherlands 8 99 United States 16 8

10 United Kingdom 14 1011 Australia 11 1312 Andorra - -13 Sweden 7 614 Norway 5 1415 Luxemburg 15 716 Germany 12 1517 Liechtenstein - -18 Austria 17 1719 Belgium 13 1620 Hong Kong 27 20

Rank Country Position 2008

Position 2007

172 Belarus 169 172173 Guinea-Bissau 158 159174 Venezuela 174 161175 Congo, Republic 167 166176 Guinea 179 160177 Laos 181 168178 Uzbekistan 186 177179 Angola 178 171180 Burundi 168 173181 Iraq 180 176182 Afghanistan 182 164183 Eritrea 176 162184 Sudan 184 180185 Equatorial Guinea 187 175186 Congo, Democratic Republic 188 182187 Chad 185 178188 Zimbabwe 183 179189 Turkmenistan 189 181190 Korea, North 190 183191 Myanmar 192 184

Continents Europe (0,73) Oceania (0,65) America (0,57) Asia (0,40) Africa (0,31)

Political division North America(0.93) Western Europe(0,88) Latin America (0,45)

Central America (0,51)Non-latin Caribbean

countries (0,75) Middle East (0,41) Former socialists

countries in Europe (0,58)

Country 2009 2007 Positions won

Albania 94 134 40 Bahrein 57 74 17 Georgia 75 91 16St. Kitts & Nevis 32 47 15 Saudi Arabia 88 102 14 Dominican Republic 102 114 12 Qatar 61 72 11 Tanzania 108 119 11 Rwanda 159 169 10

Country 2009 2007 Positions lost

Malawi 141 115 -26

Argentina 114 93 -21 Nicaragua 116 95 -21

Eritrea 183 162 -21

Belize 76 56 -20 Guyana 130 111 -19

Afghanistan 182 164 -18 Senegal 123 105 -18

Iran 167 149 -18

Moldova 127 110 -17 Guinea 176 160 -16 Bolivia 133 118 -15

Europe: Denmark, Finland, Iceland, Norway and Switzerland

America: Canada and US, but then Bahamas, Barbados, St. Lucia and Chile

Africa: Mauricio, South Africa and Botswana.

Oceania: New Zealand Asia: Japan, Hong Kong

and Taiwán

US and Canada in America

NZ and Australia in Oceania

Northern countries in Europe

Non-latin Caribean countries compared to Latin America

Asia PositionHONG KONG 0.8824 1JAPAN 0.8700 2SINGAPORE 0.8065 3TAIWAN 0.7870 4KOREA, SOUTH 0.7729 5MAURITIUS 0.7556 6ISRAEL 0.7286 7KUWAIT 0.6500 8BAHRAIN 0.6460 9QATAR 0.6315 10UNITED ARAB EMIRATES 0.6148 11MALAYSIA 0.6130 12OMAN 0.5968 13THAILAND 0.5864 14JORDAN 0.5472 15MONGOLIA 0.5276 16SAUDI ARABIA 0.5232 17SEYCHELLES 0.5075 18INDIA 0.4955 19ARMENIA 0.4731 20BRUNEI 0.4660 21BHUTAN 0.4550 22PAPUA NUEW GUINEA 0.4450 23LEBANON 0.4142 24MALDIVES 0.4003 25

SRI LANKA 0.3961 26KAZAKHSTAN 0.3919 27PHILIPPINES 0.3875 28CHINA 0.3787 29MOLDOVA 0.3641 30INDONESIA 0.3569 31KYRGYZSTAN 0.3126 32AZERBAIJAN 0.3105 33PAKISTAN 0.2997 34VIETNAM 0.2803 35NEPAL 0.2542 36TIMOR-LESTE 0.2360 37CAMBODIA 0.2320 38YEMEN 0.2315 39BANGLADESH 0.2283 40SYRIA 0.1978 41TAJIKISTAN 0.1891 42IRAN 0.1844 43LAOS 0.1215 44UZBEKISTAN 0.1201 45IRAQ 0.1023 46AFGHANISTAN 0.0981 47TURKMENISTAN 0.0453 48KOREA, NORTH 0.0434 49MYANMAR 0.0235 50

Country IQI Position in Asia

Position in the world

SINGAPORE 0.8065 3 26

MALAYSIA 0.6130 12 65

THAILAND 0.5864 14 73

BRUNEI 0.4319 22 103PAPUA NUEW GUINEA 0.4660 23 107

PHILIPPINES 0.3875 27 115

INDONESIA 0.3569 30 128

VIETNAM 0.2803 34 144

TIMOR-LESTE 0.2360 36 152

CAMBODIA 0.2320 37 154

LAOS 0.1215 43 177

MYANMAR 0.0235 49 191

Country Transparency Voice & Acc Rule of LawFreedom

pressGlobal

competitivenessDoing

Business Fraser Heritage

Afghanistan 0.0278 0.1435 0.0095 0.2000 0.1099 Armenia 0.4000 0.3014 0.4095 0.2667 0.2836 0.7637 0.5319 0.8280 Azerbaijan 0.1278 0.1531 0.2476 0.1436 0.4925 0.8242 0.1702 0.3248 Bahrain 0.7611 0.2488 0.6952 0.1949 0.7313 0.9066 0.7447 0.8854 Bangladesh 0.1833 0.2871 0.2524 0.2308 0.1791 0.3956 0.2411 0.0573 Bhutan 0.7556 0.2344 0.6381 0.3282 0.3187Brunei 0.1722 0.5952 0.1590 0.7164 0.5165 Cambodia 0.0667 0.2392 0.1476 0.3487 0.1940 0.2582 0.3694 China 0.5833 0.0622 0.4286 0.0769 0.7836 0.5440 0.3475 0.2038 Hong Kong 0.9333 0.6555 0.9048 0.6564 0.9254 0.9835 1.0000 1.0000 India 0.5000 0.5933 0.5619 0.6103 0.6343 0.3297 0.4610 0.2739 Indonesia 0.3056 0.4306 0.2762 0.4154 0.5970 0.2912 0.2908 0.2484 Iran 0.2111 0.0861 0.2333 0.0564 0.2198 0.4397 0.0446 Iraq 0.0167 0.1005 0.0143 0.2154 0.1648 Israel 0.8222 0.7177 0.7333 0.6974 0.8358 0.8407 0.4681 0.7134 Japan 0.9000 0.7560 0.9000 0.8103 0.9403 0.9396 0.8156 0.8981 Jordan 0.7278 0.2823 0.6476 0.3077 0.6493 0.4451 0.6809 0.6369 Kazakhstan 0.2000 0.1866 0.2476 0.1333 0.5149 0.6209 0.7092 0.5223Korea, North 0.0048 0.1571 0.0051 0.0064Korea, South 0.7833 0.6746 0.7476 0.6410 0.9104 0.8791 0.8014 0.7452 Kuwait 0.6444 0.3349 0.7143 0.4103 0.7463 0.7198 0.8723 0.7580 Kyrgyzstan 0.0611 0.2823 0.0952 0.2051 0.0970 0.6319 0.5674 0.5605 Laos 0.1667 0.0670 0.1810 0.0872 0.0934 0.1338 Lebanon 0.4333 0.3445 0.3048 0.4051 0.4560 0.5414

Country TransparencyVoice &

AccRule of

LawFreedom

press

Global competitiv

enessDoing

Business Fraser Heritage Malaysia 0.7444 0.3110 0.6524 0.2718 0.8507 0.8956 0.4965 0.6815 Maldives 0.3611 0.2201 0.5429 0.2513 0.6264 Mauritius 0.7778 0.7321 0.7429 0.7282 0.5821 0.8736 0.7163 0.8917 Moldova 0.3722 0.3636 0.3048 0.2462 0.2985 0.4341 0.4539 0.4395 Mongolia 0.4056 0.5215 0.4476 0.5846 0.2612 0.6868 0.7021 0.6115 Myanmar 0.0111 0.0096 0.0571 0.0103 0.0213 0.0318 Nepal 0.3111 0.2297 0.3190 0.3795 0.0672 0.3352 0.0993 0.2930 Oman 0.7722 0.1962 0.7238 0.1897 0.7239 0.6923 0.7376 0.7389 Pakistan 0.2556 0.1914 0.1952 0.2410 0.2537 0.5769 0.2695 0.4140 Philippines 0.2056 0.4306 0.3429 0.5026 0.4776 0.2308 0.4894 0.4204 Qatar 0.8444 0.2823 0.8000 0.2923 0.8134 0.8022 0.5860 Saudi Arabia 0.5500 0.0766 0.5857 0.1026 0.8060 0.9176 0.6242 Seychelles 0.7000 0.4689 0.5810 0.3590 0.4286 Singapore 0.9833 0.3493 0.9524 0.2103 0.9701 1.0000 0.9929 0.9936 Sri Lanka 0.4833 0.3541 0.5571 0.2359 0.4328 0.2766 0.4331 Syria 0.1889 0.0526 0.3762 0.0821 0.4254 0.2473 0.1206 0.0892 Taiwan 0.7889 0.6938 0.7048 0.8308 0.8806 0.6703 0.8794 0.8471 Tajikistan 0.1500 0.1148 0.1143 0.1385 0.1418 0.1264 0.4468 0.2803 Thailand 0.5444 0.2967 0.5286 0.3846 0.7537 0.9341 0.6624 Timor-Leste 0.1944 0.4402 0.0810 0.5897 0.0448 0.0659 Turkmenistan 0.0778 0.0191 0.0762 0.0154 0.0382 United Arab Emirates 0.8111 0.2297 0.6952 0.2256 0.7761 0.7527 0.8227 0.6051 Uzbekistan 0.0833 0.0335 0.1476 0.0359 0.2418 0.1783 Viet Nam 0.3278 0.0718 0.3905 0.0923 0.4851 0.4945 0.2340 0.1465 Yemen 0.2222 0.1866 0.1905 0.1179 0.4615 0.2102

“The process of enlargement of options for people and the welfare they achieve are at the heart of the concept of human development. Those options are neither finite nor static. Nevertheless, the three esential options for people are: living and extended and healthy life, getting knowledge and having access to those resources needed to have a decent life. But human development does not stop there. Other options, to which many people asign great value, go from political, economic and social freedom to opportunities to have a creative and productive life and enjoy self-respect and protection of human rights.

Life expectations at birth (25-85 years)

Rate of adult literacy and gross rate of admission to primary, secondary and tertiary education (0 and 100%)

per capita GDP (100 and 40.000 dollars)

Position HDI Country Value Position IQI1 Iceland 0,968 41 Norway 0,968 53 Australia 0,962 114 Canada 0,961 95 Ireland 0,959 106 Sweden 0,956 77 Switzerland 0,955 68 Japan 0,953 208 Netherlands 0,953 8

10 France 0,952 1910 Finland 0,952 312 United States 0,951 1613 Spain 0,949 2813 Denmark 0,949 115 Austria 0,948 1716 United Kingdom 0,946 1416 Belgium 0,946 1318 Luxemburg 0,944 1519 New Zeland 0,943 220 Italy 0,941 48

AsiaPosition General

positionCountry Value

1 8 Japan 0.9562 22 Hong Kong 0.9423 24 Israel 0.9304 25 Korea 0.9285 27 Brunei 0.9196 28 Singapore 0.9187 29 Kuwait 0.9128 31 United Arab Emirates 0.9039 32 Bahrein 0.90210 34 Qatar 0.89911 53 Oman 0.83912 54 Seychelles 0.83613 55 Saudi Arabia 0.83514 63 Malasya 0.82315 71 Kazakhstan 0.80716 74 Mauritius 0.80217 78 Lebanon 0.79618 81 Thailand 0.786

19 83 Armenia 0.77720 84 Iran 0.77721 90 Jordan 0.76922 94 China 0.76223 97 Azerbaijan 0.75824 99 Maldives 0.74925 102 Philippines 0.74526 104 Sri Lanka 0.74227 108 Turkmenistan 0.72828 109 Indonesia 0.72629 114 Vietnam 0.71830 131 Bhutan 0.61331 132 India 0.61232 133 Laos 0.60833 135 Myanmar 0.58534 136 Cambodia 0.57535 139 Pakistan 0.56236 147 Bangladesh 0.52437 149 Papua New

Guinea0.516

Countries with better positions at IQI show a better trend at HDI

For example: Since 1980 Brunei improved its HDI by 0.092 points,

Singapore 0.134, Israel 0.103, Kuwait and UAE 0.100, Bahrein 0.132, Malaysia 0.158, Thailand 0.142

Myanmar did it by 0.096 points, Laos by 0.088 (since 1995)