simple regression analysis confirms the absence of statistical correlation between country size and economic freedom.
Simple regression analysis is not a good choice with skewed data, such as the population size of different countries. What the regression algorithm does in this case is just compare the freedom index values of China and India with the average of all other countries. That is not very informative.
If you want to see a more careful analysis, which does show that smaller countries tend to be better run, see the essay that I wrote on The recipe for good government.
Ed Dolan has a good analysis of what makes for good government that these indexes often lack, https://niskanencenter.org/blog/quality-government-not-size-key-freedom-prosperity/
I think economics suffers from too many “simple regressions”. There are so many components to economies that are not directly measurable, such as the impact of regulations, that regressing a model to measured quantities will not give you a meaningful answer.
In the end, isn’t the problem that economics has too many “unknown unknowns”? When does the importance of common sense become recognized over conclusions based upon data analysis that doesn’t make sense?
Great recipe paper there. I’d buy the book if you fleshed it out. Some random thought. In government, there is no market for corporate control to keep management honest, they way there is ideally in the real world. So the government dog lays there carrying a hundred and one different “good government” ticks. You got GAO, the IGs, Congressional oversight, CRS, CBO, special commissions, etc, etc, wisely informing us that better management would result in better managed government. Then you have the parasites on the inside, progam evaluation, program analysis, performance improvement this, performance improvement that program. Your smaller dog just can’t carry the load that a big dog does. In government, I’d say there are inverse returns to scale. Second, in a smaller country, centralization is less a negative issue. Less HQ versus districts issues/bureaucracy/redundancies/ineffeciencies. Last but not least, the inefficiences associated with hierarchical command and control structures are inevitably worse the larger the government. There is something about public governance that inevitably moves decisionmaking authority at least two levels above where it can be exercised effectively. Call it reverse-subsidiarity. Small countries have more subsidiarity and hence better government. (Subsidiarity is a principle of social organization that holds that social and political issues should be dealt with at the most immediate or local level that is consistent with their resolution.)