Breathe
By María Fernanda Cobo M.
A State that achieves the right balance of powers promotes all objectives of economic growth and social welfare, which can only be built on political stability and the full validity of representative democracy. Progress requires legality to be sustainable; and economic freedom and free enterprise need the rule of law to create wealth and quality employment in a market economy open to free competition.
Economic freedom is a fundamental right: a right to work, produce, consume and invest in an environment of legal certainty, regulatory efficiency and absence of corruption. According to the Heritage Foundation's Index of Economic Freedom, when an economy progresses in economic freedom, there is an average annual GDP growth of 2.6% compared to economies that reduce their economic freedom by registering an annual growth of 1.7%. Progress in economic freedom represents the opportunity to build prosperity from free private initiative: business.
Freedom of enterprise is also a fundamental right; an exercise of civil society's democracy, from which other rights such as freedom of labor, freedom of trade and freedom of investment are derived. These freedoms find their opportunities and limits in the very nature of the market: its uncertainty, instability and risk. Freedom of enterprise promotes formality and tax collection. According to the OECD, "in countries where economic freedom (EF) is high, the informal economy averages 8.4% of GDP, while in countries where EF is moderate, the informal economy rises to 12.8%, and when EF is low, the informal economy rises to 20.9% on average". Formality stimulates growth based on labor flexibility, productive specialization and competitive innovation.
Economic freedom and free enterprise, being economic and social rights, measure their effectiveness in society through the integration of sustainable development standards in the labor, productive and commercial management of economic agents. According to the degree of economic freedom, important progress is identified in human development indicators, as well as environmental performance, achieving sustainability, competitiveness and profitability reflected in free, fair and prosperous companies.
Promoting economic freedom as a State policy requires respect for the constitutional order, which establishes that only by law can the exercise of fundamental rights and freedoms be regulated, as a result of a deliberative intervention that reflects the political pluralism that the rule of law can and must preserve as the guarantor of these rights; otherwise, without a legal system that guarantees equity and transparency, the exercise of business becomes uncertain and risky, which can discourage investment and innovation, essential pillars for growth and sustainable development.
If the state can learn anything from the free market, it is the value of consensus as competition to create wealth; as Wilhelm Röpke said: "economic freedom is not an end in itself, but a necessary means to the attainment of the ends of economic and political democracy: a high degree of material prosperity, a just distribution of wealth and income, and political freedom. They are the only safeguard of a true democracy".
Biography:
María Fernanda Cobo has a Master's degree in Human Rights and is a specialist in Management, Government and Public Affairs. She is currently a professor at the Diplomatic Academy of the Ministry of Foreign Affairs and Human Mobility of Ecuador.
The opinions expressed are the responsibility of the authors and are absolutely independent of the position and editorial line of the company. Opinion 51.
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