“Revisiting the Relationship between Economic Freedom and Development to Account for Statistical Deception by Autocratic Regimes”, 2024-07-25 (; similar):
[commentary] The literature connecting economic freedom indexes to income levels and growth generally points in the direction of a positive association. In this paper, we argue that this finding is a conservative one as the data is biased against finding any effects. The bias emerges as a result of the tendency of dictatorial regimes to overstate their GDP level. Dictatorships also tend to have lower scores of economic freedom. This downwardly biases any estimations of the relation between income and economic freedom.
In this paper, we use recent corrections to GDP numbers—based on nighttime light intensity—to estimate the bias.
We find that the true effects of economic freedom on income levels are 1.1–1.62× greater than commonly estimated. For economic growth, the bias is far smaller.
Finally, we find suggestive evidence that the relationship between changes in economic freedom and economic growth is being underestimated as a result of the lies of dictators regarding GDP…Our results are consistent with findings that dictatorships are generally unable to sustain high levels of economic development and that they are not noticeably better at securing faster economic growth.
[Keywords: economic freedom, economic growth, dictatorship, development]
[VOA: ”China: China’s authoritarian leader Xi Jinping was sworn in for another five-year term last week. Martinez’s model suggests Beijing may have overstated GDP growth by a third over the past two decades, making its economy far smaller than claimed. A report published by the Brookings Institution in 2019 suggested that China had been overstating its economic growth by about 2% every year, making its economy 12% smaller than official figures then claimed.
China denies manipulating economic data. Beijing delayed the release of its 2022 third quarter growth figures without explanation, coinciding with the Communist Party congress. The figures were eventually released in late October, claiming year-on-year quarterly growth of 3.9%, exceeding analysts’ forecasts.“]