MS Economics Student, University of the Philippines Los Baños Variations in Political Institutions and Per Capita GDP growth: A Cross-Country Examination on ASEAN Member States Ina Judith C. Calabio MS Economics Student, University of the Philippines Los Baños

“The factors we have listed are not causes of growth; they are growth.” -North & Thomas, 1973

Why are some countries richer than the others?

“The fundamental explanation of comparative growth is the differences in the existing institutions across countries.” -North & Thomas, 1973

ECONOMIC INSTITUTIONS FINANCIAL INSTITUTIONS LEGAL INSTITUTIONS SOCIAL INSTITUTIONS INSTITUTIONS POLITICAL INSTITUTIONS

OBJECTIVE To know whether differences in existing political institutions in the ASEAN member states explain the differences in Per Capita GDP growth of the said member states from period 1993-2012

Conceptual Framework Economic Institutions  𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒 𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑜𝑓 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑠 𝑡+1 Political power  Economic Institutions Political Institutions t  De Jure Political Power t

Conceptual Framework Political Institutionst  De Jure Political Powert  Economic Institutionst  Economic Performancet Political Institutionst Economic Performancet

Methodology Scope: ASEAN countries (excluding Myanmar and Brunei Darussalam due to insufficient data) from 1993-2012 Data and Sources: World Bank’s Database of Political Institution World Bank’s data on per Capita GDP and % Share on GDP of Government Expenditure Transparency International’s data on Corruption Perceptions Index

Methodology Random Effects Panel Model lnGDPperCapitait= αit+ β1CPIit+ β2GovExpit+ β3YRSOFFCit + β4YRCURNTit+ β5TOTALSEATSit+ β6LIECit+ β7EIECit+ γ1 FINITTRMit+ γ2CONSMNRCHYit + γ3SOCREPit + γ4REPit +μit + ɛit

Definition of Variables Type lnGDPperCapita GDP per capita PPP at 2011 constant prices (growth) Dependent Variable; Continuous CPI Corruption Perceptions Index IV; Discrete; Scale GovExp Government Expenditure (per capita PPP at 2011 constant prices) IV; Percentage YRSOFFC Number of years in service of the chief executive IV; Continuous YRCURNT Number of years left in current term of the chief executive TOTALSEATS Total Seats in the Legislature IV; Discrete LIEC Legislative Index of Electoral Competitiveness FINITTRM If there is a constitutional limit on the number of years the executive can serve IV: Dummy Variable: 1 if yes, 0 otherwise CONSMNRCHY Form of Government: Constitutional Monarchy IV: Dummy Variable: 1 if yeas, 0 otherwise SOCREP Form of Government: Socialist Republic REP Form of Government:: Republic PARL Form of Government: Parliamentary Republic Base Dummy

Results and Discussion Figure 1. GDP per Capita PPP at 2011 Constant Prices of ASEAN Member States

Corruption Perceptions Index

Government Expenditure (per capita)

Results and Discussion Table 2. Form of Government from 1993-2012

Results and Discussion Table 3. Estimation Results R2: 0.8534 (Overall) Prob>Chi2=0.000 * Significant at 5%

Results and Discussion Variations in Political Institutions explain the variations in per capita GDP among ASEAN member states The larger the Government Expenditure (per capita), the larger the GDP per Capita Growth A parliamentary republic form of government has a positive relationship with per Capita GDP Growth Negative relationship between Years in office and per Capita GDP

Results and Discussion Total seats in legislature is positively related with per Capita GDP The positive relationship between a parliamentary republic form of government and per capita GDP can be observed in Singapore

Conclusion Variations in political institutions across ASEAN member states explain the variation in per capita income of the said countries. Furthermore, this adds to the existing argument that political institutions do matter for development of countries across the globe.

Limitations of the Study Although the study has shown intuitive results, it can still further be improved through adding more variables to represent the political institutions of countries. The database used by this study offers a large pool of variables but the study only selected a few range of variables. Also, since the available data on GDP per capita (PPP 2011 constant prices) are only from 1993-2012, it limited the author to a 20-year time period which had not fully covered the shifts in the systems of government of the countries included in this study. Lastly, although the study aims to speak the results for the whole ASEAN, due to limited data available for Myanmar and Brunei Darussalam, they were not included in the study.

THANK YOU!