What Causes Prosperity?

The question “What Causes Prosperity?” has puzzled economists, political scientists, and philosophers for years. They are beginning to agree, however, that a country will usually be prosperous if its citizens have economic freedom—the liberty to choose what work to do, to engage in trade, and to act entrepreneurially. Your essay should consider this cause and, if you agree, explain why it leads to prosperity. You may consider other factors as well.

Economic freedom occurs when nations have institutions (rules, laws, customs) that allow people to exchange their labor and goods with others without severe restraints. It will be helpful for you to learn which institutions encourage economic freedom and thus prosperity and which do not. Such institutions include protection of property rights, the rule of law, and limitations on government, among others.

You may wish to concentrate on the prosperity of just a few countries. For example, you might consider how countries such as Great Britain, France, and Japan became prosperous many years ago. Or you might give guidance to today’s developing countries, such as Botswana and Thailand, or comment on countries formerly in the Soviet bloc.

The articles below will help you understand the role of economic freedom and help you evaluate other factors that may contribute to the move from poverty to wealth.

  1. “The Benefits of Economic Freedom: A Survey,” by Niclas Berggren. 2003. Independent Review 8(2) Fall. See: http://www.independent.org/publications/tir/article.asp?issueID=5&articleID=48
  2. “Specialization and Wealth,” by Dwight R. Lee. The Freeman. 1998. August. http://www.fee.org/publications/the-freeman/article.asp?aid=3509.
  3. “The Mystery of Capital” by Hernando DeSoto. Finance and Development 38(1), March 2001. http://www.ild.org.pe/eng/articles_enm1.htm
  4. “Freedom versus Collectivism in Foreign Aid” by William Easterly in Economic Freedom of the World: 2006 Annual Report, 2006. http://www.freetheworld.com/2006/2EFW2006ch2.pdf