By Ignacio Campomanes, Nina Dannaoui, Joseph Lemoine, and Dan Negrea

June 25, 2024 – The Atlantic Council

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Executive summary
We are living in turbulent times, and 2024 is without doubt a crucial year. A total of sixty-four countries and almost half of the population of the world will hold national elections this year. Their results will determine the future path for freedom and prosperity in years to come. This report presents the annual update of our indexes, which portray a clear picture of the situation of the world during this decisive year. Moreover, a detailed analysis of the trends of freedom, prosperity, and their respective components during the last decade uncovers several striking facts that can help us understand how we got to this critical juncture.

Freedom at a global level has been stagnant in the last decade, and we document that this is the outcome of two opposing forces: declining political freedom and increasing economic freedom. The former is by far the most worrisome trend in recent years. Our political subindex clearly shows that this process started way before the COVID-19 pandemic, and is still ongoing today, several years after. Overall, the political subindex scores of two-thirds of the countries of the world have decreased since 2013, including a vast majority of countries with well-established democracies in Western Europe and North America.

Analyzing the components of the political subindex, we find that the erosion of political institutions is due to a significant weakening of the safeguards and guarantees that ensure contestation and control of power. Political rights, especially freedom of expression and information, and legislative constraints on the executive, have suffered major declines across the world in the last decade. The widespread wave of disinformation and election interference is deeply troubling. It represents not just an attack on democracy, but a fraudulent attempt to subvert the electoral process. Once in power, if governments succeed in limiting the ability of civil society and other institutions to hold them accountable, they pave the way for a slide into outright autocracy.

While the legal subindex has shown a slight decline since 2013, it’s noteworthy that the components most closely linked to the core principles of liberal democracy, such as clarity of the law and independent justice, have seen the steepest declines. This fact can only reinforce the perception of a major regression in the system of checks and balances that characterizes free societies.

The bright side of freedom measurement in the last decade is driven by freer economic environments across the globe. A total of 130 countries, out of the 164 covered by the indexes, have improved their economic subindex score. Moreover, this positive tendency is predominantly driven by a prominent improvement of the component measuring women’s economic opportunities, which has risen in virtually all the countries of the world. Furthermore, it is encouraging to notice that some of the worst performers in gender equality in terms of economic affairs, such as some Gulf monarchies, have improved substantially. Globally, economic freedom improvements, including mild but widespread increases in trade and investment freedom, as well as property rights’ protection, have acted as a counterweight to the negative evolution of political freedom.

The Prosperity Index reveals the remarkable effects of the pandemic in several of its components—health, income, and education—which jointly produced a halt in the strong improvement of the previous decades. As of today, the global prosperity scores have yet to reach their pre-2019 levels. Nonetheless, this fact does not seem to be solely attributable to the devastating consequences of the pandemic, given two additional circumstances we document in this report.

On the one hand, the component measuring the treatment received by minorities has worsened consistently since 2013, a trend we connect with the deterioration of the political environment and institutions. On the other, the index shows that the share of countries experiencing prosperity growth rates exceeding the Organisation for Economic Co-operation and Development (OECD) average has been substantially lower since 2013, compared to the previous decade. This means that from 1995 to 2013, developing countries were improving their prosperity faster than wealthy countries. This convergence process has clearly slowed down and fewer countries are progressing as quickly, with significant repercussions for millions of citizens in the world’s least developed areas.

The descriptive trends documented above raise the fundamental question of whether there is a clear link between the evolution of freedom and that of prosperity. Unfortunately, the unprecedented effects of the pandemic on prosperity make it hard to assess the effects of the stagnation of freedom in the last decade. Nonetheless, the ample time coverage of the Freedom and Prosperity Indexes allows us to analyze the relation between both indexes with a long-term perspective. We provide several pieces of evidence, reaching a consistent result: freedom is closely associated with prosperity.

Higher scores in our Prosperity Index are highly correlated with prosperity (0.71). Moreover, when we look at changes in both indexes, we obtain again a very substantial association (0.49). When we compare the third of countries with the highest freedom improvement since 1995 to the less-improved third, we find that prosperity growth has been 50 percent higher in the former group.

Having shown the close long-term relation between freedom and prosperity, we delve into a related question: Do reforms toward freer institutions produce immediate effects on prosperity, or are their fruits only visible after a long time? Our results, based on local linear projections, lean toward the latter. A significant positive shock to the Freedom Index (i.e., the top 20 percent of yearly changes), generates an instantaneous effect on prosperity that is rather small (0.11 points in the year of the shock). Nonetheless, the cumulative effect extends during the following two decades, and is estimated to be seven times higher after twenty years. Conversely, a negative shock produces a 0.13-point drop in prosperity on the year of the impact, but again the cumulative effect in the next two decades is substantially higher, reaching 0.56 points.

The facts and analysis provided in this report are only a small example of the significant capabilities and usefulness of the Freedom and Prosperity Indexes for academic and policy-oriented research. We firmly believe that unbiased, rigorous, data-driven research and policy implementation is the surest path to advance freedom and generate sustained prosperity across the world. Therefore, we encourage scholars and public officials to use the indexes to further explore the mechanisms and interaction between freedom and prosperity, as well as their components, in specific countries, regions, or periods of time.