Analyzing the Relationship between Economic Freedom and Economic Growth: The Case Study of South-West Asian Countries

Aims: The main propose of this paper is analyzing the impact of economic freedom on growth in South West Asian countries using the panel data.

Place and Duration of Study: This study uses the panel data from 2000 to 2011 for 24 South West Asian countries economic freedom measurements are taken from The Heritage Foundation, reported in 2012. And all other statistics are taken from International Financial Statistics 2011 published by the International Monetary Fund and from world development indicators (WDI) 2012.

Methodology: The study employs econometric technique like Auto Regressive Distributive Lag (ARDL) Model to investigate the long run relationship between concerned variables.

Results: The analysis shows that the level of economic freedom robustly, positively and significantly affects the GDP per capita of the south west Asian countries; the impact of two control variables openness and foreign direct investment on growth of the south west Asian countries are also positive and statistically significant.