How Economic Freedom Index is Related to External Trade (Essay Sample)

Freedom index
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Institution
Freedom index
Freedom index is the ranking of different states or countries according to their regulation, trade restriction, and government spending relative to the Gross Domestic Product. It evaluates the government-controlled tariffs, which affects the ability to earn a living. It evaluates whether a country how much freedom a country in relation to international trade depending on different economical protections and tariffs. Moreover, it measures regulation tariffs, economical rights, civil liberties, and political rights. Global organizations use Freedom indexes to measure prospective improvement of countries economy and show the ranks of different states in terms of economic growth and development. It is due to the difference in freedom index that we have some societies, which are more developed than others are.
Heritage Foundation and Wall Treat Foundation created the freedom Index of economics involves a sequence of economic measurement. The basic fundamental freedom of Economic Index is that every individual should control their labour and produce goods and services freely. Furthermore, they can consume and invest everywhere they like without any internal or external retraction. Some of the factor-scores considered in Economic Freedom Index include, freedom from corruption, labour freedom, financial freedom, freedom to invest, fiscal and monetary freedom, trade freedom, property rights and business freedom.
A country ranked to have free economic indices has either low or zero international trade restrictions and tariffs. In such state, the law of demand and supply determines the prices of goods and services. There is stiff and fair competition of products. Fewer regulations and fewer restrictions encourage large number of goods and services leaving and entering the country thereby promoting the growth of international trade. A country with no free rank of Economic Freedom Index has lots of trade restriction and tariffs that hinders the growth of international trade. Nations with higher ranks of freedom index has more Economical Freedom, which leads to improved international trade, high incomes, low poverty levels, low unemployment rates, and high GDP per capital. Such factors improve the quality of living hence increasing the living standards of citizens.
International trade is the exchange of goods and services among different countries. International trade is very crucial in the growth of the local market. International trade makes it possible for us to select, analyze, compare and chose different goods and services from all the parts of the world. For instance, today one ca...