1. Regime Type and Economic Development By James Mazol

2. 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

3. 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

4. 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

5. 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

6. 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

7. Data Analysis

8. Regime type and mean GDP per capita

9. Regime type and GDP growth

10. Regime type and Gini

11. 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

12. Does Democracy Lead to a More Developed Country?

14. 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

15. 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

16. Corruption Correlations

17. 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

18. 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

19. Regression Analysis

22. Regulation Correlations

23. 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

24. Regression Analysis

27. 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

28. 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