Economic Freedom of "Quad" Nations Can Accelerate COVID-19 Recovery

COMMENTARY Global Politics

Economic Freedom of "Quad" Nations Can Accelerate COVID-19 Recovery

May 8th, 2020 2 min read

Commentary By

James Jay Carafano @JJCarafano

Vice President, Kathryn and Shelby Cullom Davis Institute

Riley Walters

Senior Policy Analyst, Economist

President Trump with Japan's Prime Minister, Shinzo Abe, and India's Prime Minister, Narendra Modi, during a trilateral meeting on the first day of the G20 summit on June 28, 2019. Carl Court / Staff / Getty Images

Key Takeaways

The Quadrilateral Security Dialogue, comprising the U.S., Australia, Japan, and India, was born out of the response to the 2004 Indian Ocean tsunami.

Now it’s time for the “Quad” to assemble against a new threat; namely, COVID-19 and the 2020 global recession. 

Quad members, working domestically and together, empowering economic freedom for businesses and people, will be essential for a quick economic recovery. 

The Quadrilateral Security Dialogue, comprising the U.S., Australia, Japan, and India, was born out of the response to the 2004 Indian Ocean tsunami.

The dialogues were suspended in 2008, but since the Trump administration resurrected them in 2017, they have assumed much greater strategic significance vis-a-vis China.  

Now it’s time for the “Quad” to assemble against a new threat; namely, COVID-19 and the 2020 global recession. 

>>> When can America reopen? The National Coronavirus Recovery Commission, a project of The Heritage Foundation, is gathering America’s top thinkers together to figure that out. Learn more here.

Quad members, working domestically and together, empowering economic freedom for businesses and people, will be essential for a quick economic recovery. 

The National Coronavirus Recovery Commission convened by The Heritage Foundation has already identified U.S. leadership in economic freedom as one of the key pillars for getting the U.S. back to work. 

Making sure economic freedom is a part of the recovery will be essential among the other Quad members as well. 

A quick recovery for the Quad will be no small accomplishment, however.

The Quad represents not just a quarter of the world’s population (1.8 billion people), but also a little more than a quarter of the world’s economic activity (as measured by gross domestic product). 

Trade between the Quad economies topped $440 billion in 2018, while the Quad traded almost $6 trillion with the rest of the world. 

A quarter of all global foreign direct investment flows (averaging more than $380 billion a year) comes from Quad countries. And by 2018, the Quad held a foreign direct investment stock of $8.7 trillion—or roughly $1 for every $4 ever invested abroad. 

Meaning, the sooner Quad members can recover, the sooner their trading and investment partners abroad—within the Quad and beyond it—can recover, too. 

An emphasis on economic freedom can speed up the recovery for Quad economies, but economic freedom is not equal among its four member states. 

According to The Heritage Foundation’s 2020 Index of Economic Freedom, only three of the four Quad economies are above the world average for economic freedom. 

Australia has the fourth-freest economy in the world. With an overall score of 82.6 out of 100, Australia is considered a free economy. 

With overall scores of 76.6 and 73.3, respectively, the U.S. and Japan are both considered mostly free economies. 

But India, with an overall score of 56.5, is considered a mostly unfree economy.

Unless the Quad economies can focus on structural reforms focused on economic freedom as they strive to get their economies back to work, they can expect a struggle to get back to just average economic growth—and even that will not be enough to truly recover. 

Working together, however, they can better find the strength to do what’s necessary to get their economies moving again.

This piece originally appeared in The Daily Signal