Good Neighbors: is capitalism contagious?

• Author: Weigel, David
• Position: Citings - Free trade agreements for better economic freedom - Brief article

EVERY POLICY maker wants to expand markets, wealth, and human freedom. The economists Russell S. Sobel of West Virginia University and Peter T. Leeson of George Mason University think they know how to accomplish all three at almost no cost. According to their 2006 paper "Contagious Capitalism," nations whose neighbors have liberalized markets themselves become more economically liberated. If their neighbors have free trade policies, those nations engage in freer trade too.

The Sobel-Leeson study, which has been updated and included in the Cato Institute's 2007 Economic Freedom of the World report, assigns every nation an "Economic Freedom Rating" from one to 10. The highest

score went to Hong Kong, which netted an 8.9; the lowest went to Zimbabwe, which got a 2.9. The worldwide average is 6.5. As one country's economic freedom increases, its neighbors' freedom inches up. A one-point rise in one country leads to a 0.2 increase in a country on its border. A country surrounded by rising economic...