The Issue of Causal Link between Political Freedom and Economic Freedom: Evidence from the Arab World

Abstract

The causal link between economic and political freedom is a complex and interesting debate in the domain of social sciences. To enrich the academic debate on this issue, we have examined the Arab context based on econometric instruments, especially the test of causality. Based on the results of the study, the interactions between economic and political freedom in the Arab world appear to be generally in line with the thesis strongly defended by liberal thinkers, in particular Milton Friedman and Frederick Hayek, that there is a unilinear causality in which the first variable leads to the second. This result may seem self-evident in a transformed Arab context, but the reality seems to be more complex. Economic freedom indeed guarantees freedom, the constructing of the national identity and the conditions necessary to ensure individual well-being. However, such freedom is not understood in isolation from political freedom and its social context interactions and cultural structures, in contrast with restricted collective consciousness.