Economic Freedom: Key to the 50 States’ Economic Recovery

Anthony B. Kim / June 11, 2011

Economic freedom, enhanced by limited government, is critical to economic dynamism and job creation, as documented in the Index of Economic Freedom, an annual cross-country policy analysis by The Heritage Foundation. The individual economies of our 50 states are no exception to that. The strongly positive linkage between economic freedom and economic dynamism holds true for states as well as nations.

High-stakes policy battles are going on in all 50 states about whether to move toward more limited government and greater economic freedom. According to a 2011 state-level study by the Federal Reserve Bank of St. Louis, “Economic Freedom and Employment Growth in the U.S. States,” states with greater economic freedom—defined as the protection of private property and private markets operating with minimal government interference—experienced higher rates of job growth. More specifically, the study notes that critical determinants of employment growth across all 50 states are “labor market freedom and a smaller state government.” (more…)