Evaluating Economic Freedom via a Multi-Criteria Merec-Dnma Model-Based Composite System: Case of Opec Countries

Abstract

Economic freedom indicators create a beneficial and suitable guide and a crucial reference for investors, policymakers, lenders, and market researchers worldwide. In light of these indicators, the economic freedom performances of countries can be determined. The Heritage Foundation annually releases a ranked list of the country based on their performance in terms of fourteen economic freedom criteria with equal weights through a simple aggregation approach. According to an average-based aggregator, equal weight of economic freedom criteria and calculating rank of countries cannot be a completely reliable approach. Thus, this work establishes a composite index system in the form of a decision support system that employs the method based on the removal effects of criteria (MEREC) and the double normalization-based multi-aggregation (DNMA) to specify the economic freedom levels of the OPEC countries. MEREC obtains the importance weights of indicators without the interference of any stakeholder or decision-makers. Afterward, DNMA, as a novel ranking multi-criteria method, is applied to sort countries based on their performance against all economic freedom criteria. This is the first attempt in the literature to calculate the index of economic freedom utilizing an integrated multi-criteria decision support model. Whereas “investment freedom” is the most significant indicator of economic freedom, the UAE is in the best position in terms of economic freedom among OPEC countries. A fourphased sensitivity control is also performed so as to verify the robustness and usefulness of the developed decision tool.

Approach for multi-criteria ranking of Balkan countries based on the index of economic freedom

“…Economic freedoms are defined as the fundamental rights of every human being to control their own work and property (Ecer and Hashemkhani Zolfani, 2022). The degree of economic freedom determines how hard people work, produce, spend, and invest their capital.…”

“…Based on this, it is critical to understand the state of countries' economic freedoms. The Heritage Foundation's annual index of economic freedom (IEF) is the most important of the methods used to measure this indicator in practise (Ecer and Hashemkhani Zolfani, 2022). The research presented in this paper was conducted in order to establish the level of economic freedom in the Balkan countries, with the goal of establishing the ranking of countries in terms of economic freedom according to the IEF for the year 2022.…”

A Comprehensive Review of the Novel Weighting Methods for Multi-Criteria Decision-Making

“…MEREC has found diverse applications across fields, encompassing business economics and environmental studies; however, its principal employment has been within the domain of engineering. Applications in the field of business economics are as follows: the financial performance of the hospitality and tourism industries [121], efficiency and productivity of commercial banks [122], evaluation of economic freedom levels of OPEC countries [123], assessment of distribution center locations [124] sustainable smart manufacturing systems for industry 4.0 in small, medium, and micro enterprises [125], portfolio optimization [34], and supplier selection [126]. The following are the applications in the area of environmental studies: mitigating climate change effects of urban transportation [127], identifying the optimal renewable energy power plant location [128], selecting a green renewable energy source [129], selecting offshore wind turbine [130], offshore wind farm site selection [131], circular economy paradigm in European Union countries (environmental economics) [132], and efficiency evaluation of the mineral deposit [133].…”

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“…Regarding this, it is possible to find studies that examining EFI in different ways with MCDM techniques. Some of these studies are focus on to create new indexes (Balcerzak andPietrzak 2016, Ecer andZolfani 2022) while most of them focus on ranking countries based on different economic indicators including EFI (Altin 2020, Özkaya 2022, Karakoy et al 2023, Puska et al 2023. Based on the rough literature researches, it has been thought that creating indexes are less preferred.…”