NCPA - National Center for Policy Analysis


July 18, 2008

Delaware and Texas are the most economically free states in the United States, while West Virginia has the dubious distinction of being the least economically free, according to the Fraser Institute's new study, "Economic Freedom of North America: 2008 Report."

Other major findings:

  • Between 2000 and 2005, North Dakota had the fastest growth in economic freedom with Wyoming and Montana tied for second.
  • New Mexico stands out as the only state with negative growth in economic freedom between 2000 and 2005.

The 2008 report also reinforces the notion that economic freedom leads to greater prosperity:

  • Between 2000 and 2005, the average per-capita gross domestic product (GDP) in the United States grew by 9 percent, compared to 5 percent in the states with the worst growth record and 18 percent in the states with the best.
  • Colorado, Georgia, Delaware, North Carolina, New Hampshire, Tennessee and Texas -- states with consistently strong records of economic freedom -- had a GDP per capita that was more than $4,300 above the American average in 2005, and their growth rate from 1981 to 2005 is nearly 20 percentage points higher.
  • By comparison, West Virginia, Hawaii, Maine, Montana, New Mexico, North Dakota and Rhode Island -- states with low levels of economic freedom -- had an average per-capita GDP that was more than $4,300 below the American average in 2005, and their total growth rate from 1981 to 2005 was 10 percentage points below the U.S. average.

States with high levels of economic freedom are those that tend to have lower taxes, smaller government and flexible labor markets.  These conditions create jobs and opportunities leading to economic growth, says Fred McMahon, co-author of the report.

Source: "Residents of Delaware and Texas Enjoy Highest Levels of Economic Freedom, West Virginians Face the Lowest," Fraser Institute, July 9, 2008


Browse more articles on Tax and Spending Issues