The Effect of Economic Freedom on Quality of Life: Exploring the Role of Political Risk Factors in Africa

Abstract

This article examines economic freedom’s impact on quality of life conditional on the political risk factors in Africa over the period 1985–2016, using the Generalised Method of Moments (GMM) estimation technique. The results show that economic freedom has a significant positive effect on the quality of life. However, political risk fundamentals, namely civil liberties, political rights and conflict, cause economic freedom to deteriorate the quality of life in African. These results support North’s (1990) argument that political institutions play a cardinal role in Africa’s economic outcomes and well-being. Therefore, governments in Africa must improve on the political factors to enhance economic freedom’s impact on quality of life. Moreover, policies that lead to an increase in aid and economic growth will improve the quality of life in Africa. JEL: C23, I31, P25