Answer:
Limited government describes a political system whereby the central government's role and authority is limited in certain respects, which is an important component of political, social, and economic freedom.
On average, countries with limited governments are associated with higher annual incomes, better health, longer life expectancies, and greater political and civil liberties.
However, limited government isn’t always synonymous with economic freedom and prosperity, as demonstrated by Honduras, Bangladesh, and Madagascar.
Conversely, as the Netherlands and Sweden show, countries with large and socialized governments can still prosper if other components (e.g. rule of law, property rights, sound money, free trade) are strong.