Table 5 - uploaded by Issaka Dialga
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Purpose
The purpose of this paper is to deal with methodological issues in the Index of Economic Freedom (IEF) building by using principal components analysis (PCA) and benefit of the doubt (BOD) methods to generate component- and country-specific weights in computing the scores.
Design/methodology/approach
The paper uses endogenous model and coun...
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Citations
... The Economic Freedom Index (IEF) and the Corruption Perception Index (IPC) are indices composed of several variables. The IEF addresses four pillars on which economic activity can exercise some political control: government size, market openness, regulatory efficiency, and rule of law, which contain ten components (fiscal freedom, government expenditure, commercial freedom, investment freedom, financial freedom, business freedom, labor freedom, monetary freedom, property rights and freedom from corruption) [16] . ...
Business sustainability has been assessed by combining the financial (governance) and non-financial (environmental and social) performance of companies. This assessment must consider the institutional characteristics of the countries. Brazil, Russia, India, China, and South Africa (BRICS) are emerging economies, i.e., in economic and social transition. The aim of this study is to identify the factors that affect ESG performance and each of its pillars of companies located in these emerging markets. This objective was developed by means of panel data regression with fixed effects controlled by year and economic sector, over the period 2016 to 2022, obtaining 6,278 observations of companies located in the BRICS. The main results show that a country’s higher level of transparency (absence of corruption) increases performance in the environmental and social dimensions; while the Index of Economic Freedom is associated with the governance dimension; in the characteristics at the company level, voluntary adherence to the Global Compact stands out, and large companies show better ESG performance compared to medium and small companies. These results have empirical implications at the country level (policies and legislation) and at the company level (headquarters country and size differences). The main contribution indicates that different factors affect the ESG performance of BRICS countries and of companies located in these countries. This contribution fills a gap in the literature and empirical evidence on ESG in companies from emerging markets.
... One study attempted to establish internal statistical consistency of the IEF using principal components and 'benefit of the doubt' methods. Principal components analysis (PCA); a method that generates linear combinations of the existing data to form a new set of orthogonal columns with the first column accounting for the majority of the variability, the second column accounting for the second most, etc.; suggested the existence of two constructs (rather than one measuring economic freedom) based on the IEF data (Dialga & Vallée, 2021). The study found results that 'differed dramatically with the baseline' when PCA was applied. ...
The Metropolitan Economic Freedom Index (MEFI) ranks cities based on their support of free market enterprise. In its current state, MEFI purports to measure three constructs (government spending, taxation, and labor market freedom) with three equally weighted variables for each one, assuming perfect substitutability of variables. This study investigates the statistical consistency of MEFI through Confirmatory Factor Analysis. Multiple models investigate current variable selection by providing a potentially better indicator of labor market freedom, aggregation assumptions by removing the requirements for fixed and equal weights, and statistical consistency by evaluating the fit between the data and models. Results indicate that the current MEFI model is not statistically consistent with the data, that weighting of variables should not be equal, that variable selection should be investigated, and that constructs should be re-imagined. The models investigated provide an initial starting point for redefining MEFI.
... The index examines 12 quantitative and qualitative economic factors in 184 countries, including rule of law (property rights, government integrity, judicial effectiveness), government size (government spending, tax burden, fiscal health), regulatory efficiency (business freedom, labour freedom, monetary freedom), and open markets (trade freedom, investment freedom, financial freedom) [25]. Its framework comprises four pillars that aggregate a total of 10 categories of economic freedom. ...
Background
To our knowledge, no previous study has examined the role of index of economic freedom (IEF) in the prevalence of excess weight and obesity in adolescents. The aim of this study was to determine the association between both individual and contextual economic factors and the prevalence of overweight and obesity (i.e. excess weight) or obesity in adolescents from different countries.
Methods
A cross-sectional study was carried out using data from the 2017/2018 wave of the Health Behaviour School-Aged Children study. Body mass index z-score was determined following the International Obesity Task Force criteria and, subsequently, excess weight and obesity were computed. The Family Affluence Scale was used to assess socioeconomic status. The index of IEF was used to estimate the benefits of economic freedom, both for individuals and for society as a whole.
Results
An inverse association was shown between socioeconomic status (SES) and excess weight or obesity, with adolescents with high SES and medium SES being less likely to have excess weight compared to adolescents with low SES (medium SES: odds ratio (OR) = 0.79; 95% confidence interval (CI) = 0.77–0.82, P < 0.001; high SES: OR = 0.65; 95% CI = 0.62–0.68, P < 0.001). For obesity, lower odds were also found for adolescents with medium SES (medium SES: OR = 0.74; 95% CI = 0.69–0.80, P < 0.001) or high SES (high SES: OR = 0.55; 95% CI 0.49–0.61, P < 0.001), in comparison with their counterparts with low SES. On the other hand, it was observed a lower likelihood of having excess weight and obesity in mostly unfree countries (excess weight: OR = 0.72; 95% CI = 0.51–1.00, P = 0.052; obesity: OR = 0.60; 95% CI = 0.39–0.92, P = 0.019) compared to free/mostly free countries. These results remained significant after adjusting for several sociodemographic and lifestyle covariates.
Conclusions
Both individual and contextual factors seem to have a crucial role in the prevalence of excess weight and obesity in adolescents.
... 2. EFI-The Index of Economic Freedom by the Heritage Foundation evaluates countries based on twelve factors: property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom (Dialga and Vallée 2021). The EFI Index evaluates the level of economic freedom based on the following Therefore, the basic input predictors are the following selected global indices, which evaluate the risk of corruption, economic freedom, the prosperity of the country, and the ease of conducting business, i.e., predictors where we assume their significant influence on ML/TF risk. ...
... 2. EFI-The Index of Economic Freedom by the Heritage Foundation evaluates countries based on twelve factors: property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labor freedom, monetary freedom, trade freedom, investment freedom, and financial freedom (Dialga and Vallée 2021). The EFI Index evaluates the level of economic freedom based on the following 12 quantitative and qualitative factors grouped into four broad categories or pillars of economic freedom: 1. rule of law (property rights, government integrity, judicial effectiveness), 2. government size (government spending, tax burden, fiscal health), 3. effectiveness of legal regulations (freedom of business, labour freedom, monetary freedom), 4. open markets (freedom of trade, freedom of investment, financial freedom). ...
This paper deals with ensuring the sustainability of the financial system and combating hybrid threats in relation to anti-money laundering and counter-terrorist financing (AML/CTF) measures. International cooperation in the field of combating hybrid threats is only at the beginning, and in many ways, the experience of international cooperation in the fight against money laundering and terrorist financing, which is based on many years of experience in the institutional and legislative fields, could be used. Hybrid threats are constantly changing and evolving, which means our response to them must also constantly evolve and adapt. The aim of the presented study is the analysis of the problem of the legalization of income from criminal activity and the financing of terrorism and their possible relationship with the fight against hybrid threats and maintaining the stability of the financial system.
... Index of economic freedom indicates the degree to economic freedom in countries is supported by policies and institutions of countries. Economic freedom index evaluates the nations' degree of economic independence (Dialga & Vallée, 2021). Countries with larger economic freedom score have stronger economy with greater individual GDP. ...
During times of financial turmoil, when traditional assets experience significant volatility, commodity markets provide diversification benefits to investors. The objective is to investigate the factors influencing financial contagion between the United States and emerging Asian equity markets (China and India). The study analyzes the influential impact of the volatility index, gold, oil, and USD index on financial contagion among the markets. The dynamic conditional correlation analysis is utilized to explore the correlations during the US subprime and Covid-19 crises, and quantile regression analysis is conducted at different levels of time-varying correlations. The study's results suggest that financial contagion becomes more pronounced during periods of financial turmoil, and global financial crises contribute to alterations in the dependence structure between financial contagion among equity markets and global macroeconomic risk factors. The effect of financial contagion can be abridged through altering portfolio reallocation strategies according to investors’ risk appetite during high market volatility.
... The first principal component analysis (PCA) has been used to combine these variables to construct a single index for women's empowerment. PCA allows the removal of the unit bias, accords a comprehensive series based on multiple variables and gives an efficient measure without losing information (Dialga & Vallée, 2021). Following the lines of Abdullah et al. (2021), we have constructed an index for women's empowerment. ...
... In this pillar, two of the constituents are not only negative but also strongly correlated with each other. This implies that all of the constituents are not weighed identically while constructing the comprehensive index (Dialga & Vallée, 2021;Nardo, Saisana, Saltelli, & Tarantola, 2005). ...
Women’s empowerment conduces economic growth and is crucial for empowering women. Economic freedom means that people can take economic actions independently. Yet, women remain disadvantaged in developing countries like Pakistan. The current study analyses how economic freedom fosters women’s empowerment in Pakistan. We employed time series data for 1990-2021. We employed an index of women’s empowerment (WEI) and the Women's Business and Law Index (WBLI) for economic freedom. WBLI is based on 8 distinct indicators that include diverse aspects of a woman’s life. After unit root testing, we used the ARDL approach followed by the Bound test. The long and short-run empirics have confirmed the association of women’s empowerment and economic freedom in Pakistan. There is a positive and statistically significant relationship between them. A significant ECT term with a negative sign further confirms the long-run association. Women’s mobility, women’s decision to work, rules and laws for equal pay, legal barriers to marriage for women, women’s decision to work after childbirth, restrictions for registering a business on women entrepreneurs, discrimination in the division of property and regulation for women’s pension are the factors that still impede the absolute economic freedom of women in the society.
... One study attempted to establish internal statistical consistency of the IEF using principal components and 'benefit of the doubt' methods. Principal components analysis (PCA); a method that generates linear combinations of the existing data to form a new set of orthogonal columns with the first column accounting for the majority of the variability, the second column accounting for the second most, etc.; suggested the existence of two constructs (rather than one measuring economic freedom) based on the IEF data [20]. The study found results that 'differed dramatically with the baseline' when PCA was applied. ...
The Metropolitan Economic Freedom Index (MEFI) ranks cities based on their support of free market enterprise. In its current state, MEFI purports to measure three constructs (government spending, taxation, and labor market freedom) with three equally weighted variables for each one, assuming perfect substitutability of variables. This study investigates the statistical consistency of MEFI through Confirmatory Factor Analysis. Multiple models investigate current variable selection by providing a potentially better indicator of labor market freedom, aggregation assumptions by removing the requirements for fixed and equal weights, and statistical consistency by evaluating the fit between the data and models. Results indicate that the current MEFI model is not statistically consistent with the data, that weighting of variables should not be equal, that variable selection should be investigated, and that constructs should be re-imagined. The models investigated provide an initial starting point for redefining MEFI.
... The integration of DEA and PCA has also been used quite frequently in recent years. The works by Boal-San Miguel and Herrero-Prieto (2020), Lafuente et al. (2022) and Dialga and Vallée (2021), for example, used BoD-DEA and PCA for building composite indices for various proposals. ...
The objective of this study was to propose a circular economy index applicable at a macro-level (i.e., countries). To achieve this objective, the snowball approach to literature reviews was adopted to find possible macro-level circular economy dimensions and indicators. Then, 10 indicators relating to these dimensions were identified in international databases. Finally, it was applied the benefit of the doubt (BoD) approach for data envelopment analysis (DEA), social network analysis (SNA) and principal component analysis (PCA) to build a macro-level circular economy index (MaCEI) for 18 European Union countries. The main results were as follows: (i) the identification of 52 potential indicators related to the circular economy at a macro-level were divided into 10 dimensions, (ii) a ranking of the performance of the 18 European countries in terms of their circular economy, (iii) the identification and analysis of the best circular economy practices at a national level (benchmarks), and (iv) the establishment of targets for each country. By offering a circular economy indicator and a well-established country ranking, this study contributes to the effective development of environmental standards that support public policies and national programs on the circular economy, in addition to guiding policy managers in driving the adoption of the circular economy at a macro-level.
... The Index of Economic freedom (IEF), the Corruption Perceptions Index (CPI), and the Global Sustainable Competitiveness Index (GSCI) are indexes composed of several variables. The IEF addresses four pillars in which economic activity may exert some political control: government size, market openness, regulatory efficiency, and rule of law, which contain ten components (fiscal freedom, government spending, trade freedom, investment freedom, financial freedom, business freedom, labor freedom, monetary freedom, property rights and freedom from corruption (Dialga and Vallée, 2021). ...
Complex microbial identity has been difficult to culture in a conventional technique, but the advancement of Metagenomics has brought ray of hope to this process, where microbial genomes is analyzed their respective functions in a community. Metagenomics is hence, a molecular-based protocols that have potentials to unpack the total genomic contents of microorganisms without using culture techniques. The new technique has wide application in many sectors, including industry, Agriculture, health care and medical, biotechnology and environmental microbiology. The foundation to the Metagenomics protocols includes gene cloning, extraction and enrichment of all genes in microbial sample. Then next step is cloning of the genes into the vector, which subsequently inserted into host bacteria to give rise to the metagenomic library. And the last step, involved screening and analysis of the metagenomic library. Metagenomics has changed how genomes are researched and the acceptability due to advancement of molecular techniques is considered one of the successes of science in this century. With continued advancement of sequencing technologies, the future of metagenomics in sharping research is bright and challenges such as screening of huge sequence of data could be minimized.
... (8) We also analyzed the sample by removing 1 percent of the observations from the top and the bottom. At the same time, to achieve robustness to alternative measures, we derived an alternate proxy for governance quality (GQA) through PCA from variables from the Heritage Foundation database used in several recent studies (Dialga & Vall ee, 2018;Ullah, 2020). The Heritage Foundation provides data for the key aspects of the country's overall condition that governments influence through policy controls. ...
... The Heritage Foundation provides data for the key aspects of the country's overall condition that governments influence through policy controls. The four main pillars are government size, regulatory efficiency, the rule of law, and the degree of market openness (Dialga & Vall ee, 2018). The results for robustness checks are reported in Table S6 (available online), and further description and results for an alternate proxy GQA estimation are presented in Table S7 (available online). ...
This study investigates the role of governance quality in maintaining financial stability and enhancing financial inclusion in Asian countries using the stakeholder theory. Composite variables were constructed for the governance quality, financial stability, and financial inclusion dimensions using principal component analysis (PCA). The impact of governance quality on financial stability and financial inclusion was analyzed using dynamic system generalized method of moments (GMM) estimations. Additionally, using Baron and Kenny's approach, the mediating role of financial inclusion in the relationship between governance quality and financial stability was examined. The results obtained were robust to various standardization techniques. This study's findings suggest that governance quality negatively affects financial inclusion but has a positive influence on financial stability. Furthermore, financial inclusion positively affects financial stability in Asia. Finally, based on the results, we conclude that financial inclusion mediates the relationship between governance quality and financial stability.
