A limited government is a philosophy according to which the governmental power and its legalized force are restricted by law, usually in a written constitution. It was also a key concept in liberalism.


In countries with limited government, there are fewer laws about what businesses and individuals can and cannot do. The first interpretation of the limited government is a body whose primary functions are the security of people and their property. Another description sees limited government as a body that performs only tasks that were assigned by the country’s constitution. The concept of the limited government originated in Europe and has been spread to Australia, New Zealand, the United States, Hong Kong, Singapore, South Korea, and other countries.

Hong Kong is one of the best examples of countries with limited government. In 2016, according to the Fraser index, it had the most limited government and the most economic freedom. Limited government is one of the reasons why Hong Kong had strong and rapid economic growth and became one of the Asian tigers since the 1960s. This real-life example shows that a limited government is financially beneficial for the country. Hong Kong is a significant financial center government that has a budget surplus and almost no debt. On the other side, Bangladesh has the second smallest government, according to the Fraser index but is at 121st place in economic freedom because of low ratings for its legal and monetary system, and trade freedom.

The disadvantages of the limited government include a slow decision-making process, a possible weakening of the government, and the increasing possibility of corruption. The study by Persson and Rothstein (2015) showed that bigger governments have less chance to have high rates of corruption than smaller ones. According to the Fraser index, Madagascar has the 12th lowest government, but comes 108th in economic freedom. In this country, among the high inflation and other problems, the corruption level is very high.

Limited government is a vital part of economic freedom, but it does not necessarily mean that a country that will implement it will have prosperity and high financial freedom. This concept can be both beneficial and harmful for the state implementing it. There are examples of countries that succeed politically and financially due to limiting their government. However, there are also countries that face issues such as corruption and increasing debts because of the limited government and inability to change.