ECONOMIC DEVELOPMENT NEEDS ECONOMIC FREEDOM

The aim of the paper is to assess the impact of economic freedom on economic development. The emphasis is placed on assessing the degree of transformation of the achieved degree of economic freedom into the level of their economic performance of the European countries, the Eastern Partnership countries and Russia. Using a nonparametric approach (Data Envelopment Analysis) the potential for better 'appreciation' of economic freedom for increasing their economic activity is explored. SBM input-oriented model is employed to decompose inefficiency and determine relative weaknesses of the countries below the boundary. Developed Western economies, Hong Kong and Singapur act as benchmarks for enhancing economic freedom and support decision making. In European countries, more potential for improving is represented by domains of rule of law, government size or regulation than that of the openness.