Mazol
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Regime Type and Economic Development By James Mazol Research Question and Background Are authoritarian governments better than democracies at promoting economic development? Economic Development and Political Legitimacy – Seymour Martin Lipset (1959) Autocracies superior in organizing and employing resources Less fearful of public opinion Overall more efficient Samuel Huntington’s Theory of a “Directing Agent” (1968) Better and more willing “enforcers” East Asian “Tigers” and China Hypotheses On average, democracies will be better than autocracies at promoting economic development As a country’s corruption level decreases, economic development will increase As a country’s level of business regulation increases, economic development will decrease Independent Variable Regime Type: Democracy or Autocracy Source: Freedom House, Freedom in the World Index 2006 120 electoral democracies 45 autocracies Received 6 or 7 in Political Rights ranking Freedom House designates 6 or below as autocratic government Dependent Variable Components of Economic Development Overall wealth, growth, distribution, level of development Growth – Real GDP growth %, CIA World Factbook, 2006 Wealth – GDP/capita, International Monetary Fund Index, 2006 Distribution – Gini Coefficient, UN Human Development Report, 2006 Development Level – Development List, Triennial Review of UNCTAD (Conference on Trade and Development) 50 countries are classified as Least Developed Countries (LDC) Lowest indicators of socioeconomic development with the lowest Human Development Index ratings of all the countries in the world Data Analysis – Comparison of Means Gini – Nearly the same Democracies = 41.02 Autocracies = 39.06 Growth – Autocracies 1/3 higher Democracies = 4.6% Autocracies = 6.96% GDP – Democracies have double the wealth Democracies = $12,978 Autocracies = $6380 Data Analysis Measures of Association Report Electoral Democracy or Autocracy? Electoral Democracy Autocratic Total Mean N Std. Deviation Mean N Std. Deviation Mean N Std. Deviation What is the GDP Per Capita ($ at PPP) 12978.750 120 12526.440 6380.2667 45 7200.4176 11179.164 165 11681.406 How Equally is Incom e Dis tributed (100 = perfect inequali ty) 41.0224 85 11.57851 39.0583 24 9.62085 40.5899 109 11.16472 Eta Percent GDP growth 4.6092 120 2.22643 6.9644 45 6.16165 5.2515 165 3.85873 What is the GDP Per Capita ($ at PPP) * Electoral Democracy or Autocracy? How Equally is Income Distributed (100 = perfect inequality) * Electoral Democracy or Autocracy? Percent GDP growth * Electoral Democracy or Autocracy? Eta Squared .252 .064 .073 .005 .273 .074 ANOVA Table What is the GDP Per Capita ($ at PPP) * Electoral Democracy or Autocracy? Between Groups How Equally is Income Dis tributed (100 = perfect inequality) * Electoral Democracy or Autocracy? Between Groups Within Groups Percent GDP growth * Electoral Democracy or Autocracy? (Combined) Sum of Squares 1.4E+009 df 1 Mean Square 1424944875 128550408.5 Within Groups 2.1E+010 163 Total 2.2E+010 164 72.193 1 72.193 13390.106 107 125.141 13462.299 108 181.549 2260.383 1 163 2441.932 164 (Combined) Total Between Groups Within Groups Total (Combined) 181.549 13.867 F 11.085 Sig. .001 .577 .449 13.092 .000 Regime type and mean GDP per capita Regime type and GDP growth Regime type and Gini How much influence does regime type have? Evidence does not support hypothesis GDP and Growth statistically significant Gini not statistically significant Eta Square GDP (p/capita) - .064 Gini - .005 Growth - .074 Does Democracy Lead to a More Developed Country? Electoral Democracy or Autocracy? * Is the Country Highly Underdeveloped? Crosstabulation Electoral Democracy or Autocracy? Total Electoral Democracy Count % within Electoral Democracy or Autocracy? % of Total Autocratic Count % within Electoral Democracy or Autocracy? % of Total Count % within Electoral Democracy or Autocracy? % of Total Is the Country Highly Underdeveloped? Either Highly Developed Least or Medium Developed Developed Country 103 17 Total 120 85.8% 14.2% 100.0% 62.4% 30 10.3% 15 72.7% 45 66.7% 33.3% 100.0% 18.2% 133 9.1% 32 27.3% 165 80.6% 19.4% 100.0% 80.6% 19.4% 100.0% Chi-Square Tests Pearson Chi-Square Continuity Correctiona Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases Value 7.691 b 6.514 7.121 df 1 1 1 Symmetric Measures Asymp. Sig. (2-sided) .006 .011 .008 Exact Sig. (2-sided) Nominal by Nominal .008 7.644 1 Exact Sig. (1-sided) .007 .006 165 b. 0 cells (.0%) have expected count less than 5. The minimum expected count is 8. 73. Directional Measures Lam bda Goodman and Kruskal tau Sym m etric Electoral Dem ocracy or Autocracy? Dependent Is the Country Hi ghly Underdeveloped? Dependent Electoral Dem ocracy or Autocracy? Dependent Is the Country Hi ghly Underdeveloped? Dependent N of Valid Cases Value .000 b. Using the asymptotic standard error assuming the null hypothesis. Asym p. a Std. Error .000 Approx. T .b b Approx. Si g. .b b .000 .000 . .000 .000 . .047 .036 .006 .047 .036 .006 a. Not as s um ing the null hypothes is. b. Cannot be com puted because the as ym ptotic s tandard error equals zero. c. Bas ed on chi-s quare approxim ation Phi Cramer's V a. Not assuming the null hypothesis. a. Computed only for a 2x2 table Nom i nal by Nom i nal Value Approx. Sig. .216 .006 .216 .006 165 b . b . c c Data Analysis 17 Democracies are LDCs – 14.2% 15 Autocracies are LDCs – 33.3% Small Chi-Square, statistically significant Cramer’s V - .216 indicates strong relationship LDC definition includes more than just economic development Other factors that may influence development Business Regulation – World Bank, Doing Business Report, 2006 Starting a business index Countries ranked individually 1-172, with 172 the hardest Time, cost, K investment Good indicator of level of overall regulation of business Corruption – Transparency International, Corruption Perceptions Index, 2006 Draw on expert opinion surveys 1-10 ranking, with 10 = extremely low levels of government corruption Corruption Correlations Correlations How Corrupt is the Country? (10 = not corrupt) How Equally is Income Dis tributed (100 = perfect inequality) What is the GDP Per Capita ($ at PPP) Percent GDP growth Pears on Correlation Sig. (2-tailed) N Pears on Correlation Sig. (2-tailed) How Equally How Corrupt is Income What is is the Dis tributed the GDP Country? (10 (100 = perfect Per Capita Percent = not corrupt) inequality) ($ at PPP) GDP growth 1 -.342** .873** -.227** .000 .000 .008 136 104 136 136 -.342** 1 -.400** -.213* .000 .000 .026 109 109 1 -.115 .142 N 104 Pears on Correlation Sig. (2-tailed) N .873** .000 136 109 165 165 Pears on Correlation Sig. (2-tailed) N -.227** .008 136 -.213* .026 109 -.115 .142 165 1 **. Correlation is s ignificant at the 0.01 level (2-tailed). *. Correlation is s ignificant at the 0.05 level (2-tailed). 109 -.400** .000 165 Pearson’s R Results GDP p/capita = .873 – Very strong positive relationship R square = .76 GDP growth rate = -.227 – Weak negative relationship R square = .05 Gini Coefficient = -.342 – Moderate negative relationship R square = .12 All significant at .01 level Interpreting Data Evidence partially supports hypothesis Low levels of corruption lead to wealth, very strong relationship Cannot say it is a major factor of development because of moderate negative relationship with Gini Regression Analysis What is the GDP Per Capita ($ at PPP) Corruption and GDP p/capita Regression What is the GDP Pe r Capita ($ at PPP) = -7910.57 + 4764.42 * corrupt R-Square = 0.76 60000.00 2.00 4.00 20000.00 0.00 40000.00 6.00 8.00 How Corrupt is the Country? (10 = not corrupt) Regression Analysis ow Equally is Income Distributed (100 = perfect inequality) Corruption and Gini Regression How Equally is Incom e Dis tr ibute d (100 = pe r fe ct ine quality) = 47.89 + -1.70 * cor r upt R-Squar e = 0.12 70.00 60.00 20.00 40.00 30.00 50.00 2.00 4.00 6.00 8.00 How Corrupt is the Country? (10 = not corrupt) Regression Analysis Corruption and GDP Growth Rate Regression Pe rce nt GDP grow th = 7.18 + -0.41 * corrupt R-Square = 0.05 Percent GDP growth 30.00 20.00 10.00 0.00 2.00 4.00 6.00 8.00 How Corrupt is the Country? (10 = not corrupt) Regulation Correlations Correlations How Equally is Income Dis tributed (100 = perfect inequality) Pears on Correlation Sig. (2-tailed) N What is the GDP Per Pears on Correlation Capita ($ at PPP) Sig. (2-tailed) N Percent GDP growth Pears on Correlation Sig. (2-tailed) N How Easy is it to Start a Pears on Correlation Bus ines s Sig. (2-tailed) N How Equally is Income Dis tributed (100 = perfect inequality) 1 **. Correlation is s ignificant at the 0.01 level (2-tailed). *. Correlation is s ignificant at the 0.05 level (2-tailed). What is the GDP How Easy Per Capita Percent is it to Start ($ at PPP) GDP growth a Bus ines s -.400** -.213* .340** .000 .026 .000 109 109 109 106 -.400** 1 -.115 -.542** .000 .142 .000 109 165 165 146 -.213* -.115 1 .119 .026 .142 .152 109 165 165 146 .340** -.542** .119 1 .000 .000 .152 106 146 146 146 Pearson’s R results Gini Coefficient = .340 – moderate positive relationship R square - .12 GDP growth = .119 – Negligible relationship R square - .01 GDP p/capita = -.542 – strong negative relationship R square – .29 Regression Analysis Corruption and GDP Growth Rate Regression Percent GDP grow th = 4.54 + 0.01 * regulation R-Square = 0.01 Percent GDP growth 30.00 20.00 10.00 0.00 0.00 50.00 100.00 150.00 How Easy is it to Start a Business Regression Analysis How Equally is Income Distribu ted (100 = perfect inequality) Corruption and GDP Growth Rate Regression How Equally is Incom e Distributed (100 = perfect inequality) = 33.91 + 0.08 * regulation R-Square = 0.12 70.00 60.00 40.00 30.00 20.00 50.00 50.00 0.00 100.00 150.00 How Easy is it to Start a Business Regression Analysis What is the GDP Per Capita ($ at PPP) Corruption and GDP Growth Rate Regression What is the GDP Per Capita ($ at PPP) = 20545.35 + -116.31 * regulation R-Square = 0.29 60000.00 40000.00 0.00 0.00 20000.00 50.00 100.00 150.00 How Easy is it to Start a Business Interpreting Data Same conclusion as corruption Major factor in wealth creation but not a definitive factor in development Moderate positive relationship with Gini, that is significant As countries level of corruption and business regulation decrease the level of wealth will increase Final Conclusions No evidence that either regime type is better at promoting economic development Regime type not relatively important as a factor Democracies with low levels of corruption and business regulations will tend to be wealthy
