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Regime Type and Regime Type and Economic Economic DevelopmentDevelopmentBy James MazolBy James Mazol
Research Question and Research Question and BackgroundBackground
Are authoritarian governments better than democracies Are authoritarian governments better than democracies at promoting economic development?at promoting economic development?
Economic Development and Political LegitimacyEconomic Development and Political Legitimacy – – Seymour Martin Lipset (1959)Seymour Martin Lipset (1959) Autocracies superior in organizing and employing resourcesAutocracies superior in organizing and employing resources Less fearful of public opinionLess fearful of public opinion Overall more efficientOverall more efficient
Samuel Huntington’s Theory of a “Directing Agent” Samuel Huntington’s Theory of a “Directing Agent” (1968)(1968) Better and more willing “enforcers”Better and more willing “enforcers” East Asian “Tigers” and ChinaEast Asian “Tigers” and China
HypothesesHypotheses
On average, democracies will be better than On average, democracies will be better than autocracies at promoting economic autocracies at promoting economic developmentdevelopment
As a country’s corruption level decreases, As a country’s corruption level decreases, economic development will increaseeconomic development will increase
As a country’s level of business regulation As a country’s level of business regulation increases, economic development will increases, economic development will decreasedecrease
Independent VariableIndependent Variable Regime Type: Democracy or AutocracyRegime Type: Democracy or Autocracy Source: Freedom House, Source: Freedom House, Freedom in the Freedom in the
World Index 2006World Index 2006 120 electoral democracies120 electoral democracies 45 autocracies45 autocracies
Received 6 or 7 in Political Rights rankingReceived 6 or 7 in Political Rights ranking Freedom House designates 6 or below as Freedom House designates 6 or below as
autocratic governmentautocratic government
Dependent VariableDependent Variable
Components of Economic DevelopmentComponents of Economic Development Overall wealth, growth, distribution, level of Overall wealth, growth, distribution, level of
developmentdevelopment GrowthGrowth – Real GDP growth %, CIA World Factbook, 2006 – Real GDP growth %, CIA World Factbook, 2006 WealthWealth – GDP/capita, International Monetary Fund Index, – GDP/capita, International Monetary Fund Index,
20062006 DistributionDistribution – Gini Coefficient, UN Human Development – Gini Coefficient, UN Human Development
Report, 2006Report, 2006 Development LevelDevelopment Level – – Development List, Triennial Review of Development List, Triennial Review of
UNCTAD (Conference on Trade and Development)UNCTAD (Conference on Trade and Development) 50 countries are classified as Least Developed Countries (LDC)50 countries are classified as Least Developed Countries (LDC) Lowest indicators of socioeconomic development with the lowest Lowest indicators of socioeconomic development with the lowest
Human Development Index ratings of all the countries in the world Human Development Index ratings of all the countries in the world
Data Analysis – Data Analysis – Comparison of MeansComparison of Means
Gini – Nearly the sameGini – Nearly the same Democracies = 41.02Democracies = 41.02 Autocracies = 39.06Autocracies = 39.06
Growth – Autocracies 1/3 higherGrowth – Autocracies 1/3 higher Democracies = 4.6%Democracies = 4.6% Autocracies = 6.96%Autocracies = 6.96%
GDP – Democracies have double the wealthGDP – Democracies have double the wealth Democracies = $12,978Democracies = $12,978 Autocracies = $6380Autocracies = $6380
Data AnalysisData AnalysisReport
12978.750 41.0224 4.6092
120 85 120
12526.440 11.57851 2.22643
6380.2667 39.0583 6.9644
45 24 45
7200.4176 9.62085 6.16165
11179.164 40.5899 5.2515
165 109 165
11681.406 11.16472 3.85873
Mean
N
Std. Deviation
Mean
N
Std. Deviation
Mean
N
Std. Deviation
Electoral Democracyor Autocracy?Electoral Democracy
Autocratic
Total
What isthe GDP
Per Capita($ at PPP)
How Equallyis IncomeDistributed
(100 = perfectinequality)
PercentGDP growth
ANOVA Table
1.4E+009 1 1424944875 11.085 .001
2.1E+010 163 128550408.5
2.2E+010 164
72.193 1 72.193 .577 .449
13390.106 107 125.141
13462.299 108
181.549 1 181.549 13.092 .000
2260.383 163 13.867
2441.932 164
(Combined)Between Groups
Within Groups
Total
(Combined)Between Groups
Within Groups
Total
(Combined)Between Groups
Within Groups
Total
What is the GDP PerCapita ($ at PPP) *Electoral Democracy orAutocracy?
How Equally is IncomeDistributed (100 = perfectinequality) * ElectoralDemocracy or Autocracy?
Percent GDP growth *Electoral Democracy orAutocracy?
Sum ofSquares df Mean Square F Sig.
Measures of Association
.252 .064
.073 .005
.273 .074
What is the GDP PerCapita ($ at PPP) *Electoral Democracy orAutocracy?
How Equally is IncomeDistributed (100 = perfectinequality) * ElectoralDemocracy or Autocracy?
Percent GDP growth *Electoral Democracy orAutocracy?
Eta Eta Squared
Regime type and mean GDP Regime type and mean GDP per capitaper capita
Regime type and GDP growthRegime type and GDP growth
Regime type and GiniRegime type and Gini
How much influence does How much influence does regime type have?regime type have?
Evidence does not support hypothesisEvidence does not support hypothesis GDP and Growth statistically significantGDP and Growth statistically significant Gini not statistically significantGini not statistically significant Eta SquareEta Square
GDP (p/capita) - .064GDP (p/capita) - .064 Gini - .005Gini - .005 Growth - .074Growth - .074
Does Democracy Lead to a Does Democracy Lead to a More Developed Country?More Developed Country?
Electoral Democracy or Autocracy? * Is the Country Highly Underdeveloped? Crosstabulation
103 17 120
85.8% 14.2% 100.0%
62.4% 10.3% 72.7%
30 15 45
66.7% 33.3% 100.0%
18.2% 9.1% 27.3%
133 32 165
80.6% 19.4% 100.0%
80.6% 19.4% 100.0%
Count
% within ElectoralDemocracy or Autocracy?
% of Total
Count
% within ElectoralDemocracy or Autocracy?
% of Total
Count
% within ElectoralDemocracy or Autocracy?
% of Total
Electoral Democracy
Autocratic
Electoral Democracyor Autocracy?
Total
Either HighlyDevelopedor MediumDeveloped
LeastDeveloped
Country
Is the Country HighlyUnderdeveloped?
Total
Chi-Square Tests
7.691b 1 .006
6.514 1 .011
7.121 1 .008
.008 .007
7.644 1 .006
165
Pearson Chi-Square
Continuity Correctiona
Likelihood Ratio
Fisher's Exact Test
Linear-by-LinearAssociation
N of Valid Cases
Value dfAsymp. Sig.
(2-sided)Exact Sig.(2-sided)
Exact Sig.(1-sided)
Computed only for a 2x2 tablea.
0 cells (.0%) have expected count less than 5. The minimum expected count is 8.73.
b.
Directional Measures
.000 .000 .b .b
.000 .000 .b
.b
.000 .000 .b
.b
.047 .036 .006c
.047 .036 .006c
Symmetric
Electoral Democracy orAutocracy? Dependent
Is the Country HighlyUnderdeveloped?Dependent
Electoral Democracy orAutocracy? Dependent
Is the Country HighlyUnderdeveloped?Dependent
Lambda
Goodman andKruskal tau
Nominal byNominal
ValueAsymp.
Std. Errora
Approx. T Approx. Sig.
Not assuming the null hypothesis.a.
Cannot be computed because the asymptotic standard error equals zero.b.
Based on chi-square approximationc.
Symmetric Measures
.216 .006
.216 .006
165
Phi
Cramer's V
Nominal byNominal
N of Valid Cases
Value Approx. Sig.
Not assuming the null hypothesis.a.
Using the asymptotic standard error assuming the nullhypothesis.
b.
Data AnalysisData Analysis
17 Democracies are LDCs – 14.2%17 Democracies are LDCs – 14.2% 15 Autocracies are LDCs – 33.3%15 Autocracies are LDCs – 33.3% Small Chi-Square, statistically significantSmall Chi-Square, statistically significant Cramer’s V - .216 indicates strong Cramer’s V - .216 indicates strong
relationshiprelationship LDC definition includes more than just LDC definition includes more than just
economic developmenteconomic development
Other factors that may Other factors that may influence developmentinfluence development
Business RegulationBusiness Regulation – World Bank, – World Bank, Doing Business Doing Business Report, 2006Report, 2006 Starting a business indexStarting a business index Countries ranked individually 1-172, with 172 the hardest Countries ranked individually 1-172, with 172 the hardest
Time, cost, K investmentTime, cost, K investment Good indicator of level of overall regulation of businessGood indicator of level of overall regulation of business
Corruption Corruption – Transparency International, – Transparency International, Corruption Corruption Perceptions Index, 2006Perceptions Index, 2006 Draw on expert opinion surveysDraw on expert opinion surveys 1-10 ranking, with 10 = extremely low levels of government 1-10 ranking, with 10 = extremely low levels of government
corruptioncorruption
Corruption CorrelationsCorruption CorrelationsCorrelations
1 -.342** .873** -.227**
.000 .000 .008
136 104 136 136
-.342** 1 -.400** -.213*
.000 .000 .026
104 109 109 109
.873** -.400** 1 -.115
.000 .000 .142
136 109 165 165
-.227** -.213* -.115 1
.008 .026 .142
136 109 165 165
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
How Corrupt is theCountry? (10 = notcorrupt)
How Equally is IncomeDistributed (100 =perfect inequality)
What is the GDP PerCapita ($ at PPP)
Percent GDP growth
How Corruptis the
Country? (10= not corrupt)
How Equallyis IncomeDistributed
(100 = perfectinequality)
What isthe GDP
Per Capita($ at PPP)
PercentGDP growth
Correlation is significant at the 0.01 level (2-tailed).**.
Correlation is significant at the 0.05 level (2-tailed).*.
Pearson’s R ResultsPearson’s R Results
GDP p/capitaGDP p/capita = .873 – Very strong positive = .873 – Very strong positive relationshiprelationship R square = .76R square = .76
GDP growth rateGDP growth rate = -.227 – Weak negative = -.227 – Weak negative relationshiprelationship R square = .05R square = .05
Gini CoefficientGini Coefficient = -.342 – Moderate negative = -.342 – Moderate negative relationshiprelationship R square = .12R square = .12
All significant at .01 levelAll significant at .01 level
Interpreting DataInterpreting Data
Evidence partially supports hypothesisEvidence partially supports hypothesis Low levels of corruption lead to wealth, Low levels of corruption lead to wealth,
very strong relationship very strong relationship Cannot say it is a major factor of Cannot say it is a major factor of
development because of moderate development because of moderate negative relationship with Gini negative relationship with Gini
Regression AnalysisRegression Analysis
Linear Regression
2.00 4.00 6.00 8.00
How Corrupt is the Country? (10 = not corrupt)
0.00
20000.00
40000.00
60000.00
What is the GDP Per Capita ($ at PPP) = -7910.57 + 4764.42 * corruptR-Square = 0.76
Corruption and GDP p/capita Regression
Regression AnalysisRegression Analysis
Linear Regression
2.00 4.00 6.00 8.00
How Corrupt is the Country? (10 = not corrupt)
20.00
30.00
40.00
50.00
60.00
70.00
How Equally is Income Distributed (100 = perfect inequality) = 47.89 + -1.70 * corruptR-Square = 0.12
Corruption and Gini Regression
Regression AnalysisRegression Analysis
Linear Regression
2.00 4.00 6.00 8.00
How Corrupt is the Country? (10 = not corrupt)
0.00
10.00
20.00
30.00
Percent GDP growth = 7.18 + -0.41 * corruptR-Square = 0.05
Corruption and GDP Growth Rate Regression
Regulation CorrelationsRegulation CorrelationsCorrelations
1 -.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 Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
How Equally is IncomeDistributed (100 =perfect inequality)
What is the GDP PerCapita ($ at PPP)
Percent GDP growth
How Easy is it to Start aBusiness
How Equallyis IncomeDistributed
(100 = perfectinequality)
What isthe GDP
Per Capita($ at PPP)
PercentGDP growth
How Easyis it to Starta Business
Correlation is significant at the 0.01 level (2-tailed).**.
Correlation is significant at the 0.05 level (2-tailed).*.
Pearson’s R resultsPearson’s R results
Gini Coefficient = .340 – moderate positive Gini Coefficient = .340 – moderate positive relationshiprelationship R square - .12R square - .12
GDP growth = .119 – Negligible relationshipGDP growth = .119 – Negligible relationship R square - .01R square - .01
GDP p/capita = -.542 – strong negative GDP p/capita = -.542 – strong negative relationshiprelationship R square – .29R square – .29
Regression AnalysisRegression Analysis
Linear Regression
0.00 50.00 100.00 150.00
How Easy is it to Start a Business
0.00
10.00
20.00
30.00
Percent GDP growth = 4.54 + 0.01 * regulationR-Square = 0.01
Corruption and GDP Growth Rate Regression
Regression AnalysisRegression Analysis
Linear Regression
0.00 50.00 100.00 150.00
How Easy is it to Start a Business
20.00
30.00
40.00
50.00
60.00
70.00
How Equally is Income Distributed (100 = perfect inequality) = 33.91 + 0.08 * regulationR-Square = 0.12
Corruption and GDP Growth Rate Regression
Regression AnalysisRegression Analysis
Linear Regression
0.00 50.00 100.00 150.00
How Easy is it to Start a Business
0.00
20000.00
40000.00
60000.00
What is the GDP Per Capita ($ at PPP) = 20545.35 + -116.31 * regulationR-Square = 0.29
Corruption and GDP Growth Rate Regression
Interpreting DataInterpreting Data
Same conclusion as corruptionSame conclusion as corruption Major factor in wealth creation but not a Major factor in wealth creation but not a
definitive factor in developmentdefinitive factor in development Moderate positive relationship with Gini, Moderate positive relationship with Gini,
that is significantthat is significant As countries level of corruption and As countries level of corruption and
business regulation decrease the level of business regulation decrease the level of wealth will increasewealth will increase
Final ConclusionsFinal Conclusions
No evidence that either regime type is No evidence that either regime type is better at promoting economic better at promoting economic developmentdevelopment
Regime type not relatively important as a Regime type not relatively important as a factorfactor
Democracies with low levels of corruption Democracies with low levels of corruption and business regulations will tend to be and business regulations will tend to be wealthywealthy
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