The equity return of economic freedom

Results show that cross-country equity returns are directly related to increases in economic freedom. For investors seeking superior investment returns, countries likely to experience an increase in economic freedom should be selected for investment.

So says Marshall Stocker in the latest edition of the Cato Journal. Forbes has suggested a similar investment strategy using regulatory quality as a benchmark – though they target best performers, not the most-likely to improve. Tim has pointed out that the less risk-averse investor might choose to tweak this strategy more in line with what Stocker suggests.