Figure 5
Relationship between Economic Freedom and Corruption Worldwide
9
8
7
6
5
4
3
2
1
0
Bottom
Fourth
Third
Second
Top
Economic Freedom of the World Quintiles, 2003
Source: James Gwartney and Robert Lawson, Economic Freedom of the World: 2005 Annual Report (Vancouver:
Fraser Institute, 2005), p. 26.
by the Czech Republic in 41st place, Hungary
ruption. In 2005, the Swedish government
spent almost 54 percent of GDP.71 Also in
in 52nd place and Poland in 54th place.74 In
2005, Sweden was rated as the 9th least cor-
contrast, most Western European and Anglo-
rupt country in the world.72 That lack of cor-
sphere countries are less regulated.75 A com-
ruption is partly attributable to the relatively
parison of the 2005 Doing Business Report with
light regulation of the economy, for, as the
the 2005 CPI suggests that light regulation and
World Bank found, Sweden is the 14th easi-
low levels of corruption are indeed related. For
est country to do business in.73 Also, the
example, 15 out of 20 least-regulated econo-
The "big-bang"
mies were also among the 20 least corrupt
Swedes, like citizens of most other developed
countries in the world.76
countries of
nations, benefit from a well-entrenched rule
of law. The government's activities are sub-
The rule of law, which was undermined by
Central Europe
jected to thorough judicial and parliamen-
four decades of communism, will need more
performed
tary oversight. Moreover, should the usual
time to recover. According to the Economic
checks and balances fail, the government can
Freedom of the World: 2006 Annual Report, most
significantly
be held to account by a strong and vibrant
indicators of economic freedom in Central
better than most
civil society.
Europe, including the overall size of govern-
of their eastern
Regrettably, the situation in Central Europe
ment, access to sound money, freedom to
is quite different. Not only do the governments
trade internationally, and regulatory burden,
neighbors
spend a lot of money, but the regulatory bur-
have improved between 1995 and 2004.
who took the
den remains relatively heavy. For example, the
Unfortunately, the integrity of the legal system
gradualist
2006 Doing Business report found that Slovakia
and protection of private property rights has
declined over the last decade.77 Moreover, the
had the most welcoming business environ-
approach to
ment in Central Europe, coming in at 37 out of
judicial and parliamentary oversight over
reform.
155 countries surveyed. Slovakia was followed
politicians in Central Europe lacks effective-
16