Economic Freedom as a Determinant of National Resilience

Abstract

The article examines the impact of economic freedom on national resilience, with a particular focus on identifying the key components of financial freedom that most significantly enhance institutional and economic resilience. The dependent variable used in the study is the 2925 FM Global Resilience Index. The independent variables include the 2025 Index of Economic Freedom along with its 12 components. The influence of the independent variables on the dependent variable is assessed through correlation analysis using Microsoft Excel. The study focuses on European Union member states. The statistical significance of the obtained correlation coefficients was tested using Student’s t-test. A correlation coefficient of 0.59 between the Index of Economic Freedom and the Resilience Index indicates that countries with higher levels of economic freedom tend to exhibit greater resilience to internal and external challenges. Among the components of the Index of Economic Freedom, Business Freedom demonstrates the strongest correlation with the Resilience Index (r = 0.88), followed by Government Integrity (r = 0.84) and Property Rights (r = 0.75). The study also employs cluster analysis to group EU countries based on those economic freedom indicators that show the most substantial influence on national resilience (r>|0.5|). The results of the cluster analysis reveal three distinct clusters of countries with similar institutional and economic characteristics. By applying both correlation and cluster analysis, the research not only uncovers the interdependencies between economic freedom indicators and national resilience but also provides well-founded recommendations for enhancing adaptability and long-term resilience in the face of contemporary global challenges.