Conclusion - The Quality of Government

We have set out to examine whether, from the perspective of promoting devel-opment, the quality of government across countries varies in systematic ways.

We assess the quality of government using proxies for interventionism, public sector efficiency, quality of public good provision, government size, and politi-cal freedom. The data show clearly that, using these measures of performance, the quality of governments varies systematically across countries. Rich nations have better governments than poor ones. Ethnolinguistically homogeneous countries have better governments than the heterogeneous ones. Common law countries have better governments than French civil law or socialist law coun-tries. Predominantly Protestant countries have better governments than either predominantly Catholic or predominantly Muslim countries. These results tend to be consistent across the many measures of government performance we used.

These results present clear evidence of systematic influence of historical circumstances, as captured by ethnolinguistic heterogeneity, legal origins, and religion, on government performance. Government performance is surely in part determined by economic development, but it is also shaped by systematic variation in the histories of individual countries. This conclusion, we believe, is strongly supported by the data.

The results are more difficult to interpret as supporting a particular version of political or cultural theories of institutions. Taken as a whole, however, the

re-266 The Journal of Law, Economics, & Organization, V15 N1

sults support the political theories, since ethnolinguistic heterogeneity and legal origin remain extremely important factors shaping government performance, even controlling for religion. In addition to showing that history matters, we believe that we have provided some evidence that it is political history that matters most clearly. At the same time we would not interpret our evidence as outright rejecting the cultural theories of institutions.

Finally, we have consistently found that the better performing governments are larger and collect higher taxes. Poorly performing governments, in contrast, are smaller and collect fewer taxes. This result does not of course imply that it is often, or ever, socially desirable to expand a government of a given quality, but it tells us that identifying big government with bad government can be highly misleading. The question of how the better governments get to be bigger, or vice versa, remains open for future work.

Appendix A

Summary statistics

Variable Number Mean Standard Minimum Maximum

of obs. Deviation

Interference with private sector:

Property rights index 149 3.2752 1.1500 1.0 5.0

Regulation index 149 2.7047 0.9480 1.0 5.0

Top marginal tax rate 82 41.390 12.2812 0.0 66.0

Efficiency:

Corruption index 126 5.6532 2.2945 0.1786 10.0

Bureaucratic delays 60 4.6872 1.4454 2.0292 7.7760

Tax compliance 49 3.1571 1.0019 1.43 5.05

Avg. government wages / 63 1.9111 1.2816 0.1 7.1

GNP per capita

Output of public goods:

Log infant mortality 196 3.7207 0.9020 1.9792 5.2444

Log school achievement 106 1.3934 0.5900 0.1484 2.4356

Illiteracy rate 128 31.0057 22.5418 1.8 81.3

Infrastructure quality 60 5.5284 1.8732 1.5 9.1521

Size of public sector:

Transfers and subsidies as 90 9.1837 8.3419 0.1 37.2

% of GDP

Government consumption as 104 15.028 4.9606 6.68 33.8

% of GDP

SOEs in the economy 104 4.3654 2.2212 0.0 10.0

Public sector employment as 124 4.3773 3.2256 0.4 17.3973

% of population

Continued

Appendix AContinued

Variable Number Mean Standard Minimum Maximum

of obs. Deviation

Political freedom:

Democracy index 161 3.6739 3.8922 0.0 10.0

Political rights index 209 4.6029 2.2361 1.0 7.0

Determinants:

Ethno-linguistic 161 0.3264 0.3006 0.0 1.0

fractionalization

English legal origin 212 0.3443 0.4763 0.0 1.0

Socialist legal origin 212 0.1651 0.3721 0.0 1.0

French legal origin 212 0.4339 0.4967 0.0 1.0

German legal origin 212 0.0330 0.1791 0.0 1.0

Scandinavian legal origin 212 0.0236 0.1521 0.0 1.0

Protestant population as 206 14.6932 23.3400 0.0 99.8

% of total

Roman Catholic population as 209 32.4077 36.1883 0.0 99.1

% of total

Muslim population as % of total 209 21.7399 35.2773 0.0 99.9 Other populations as % of total 206 30.9192 31.8005 0.0 100.0

Economic Development:

Latitude 209 0.2810 0.1885 0.0 0.8

Log GNP per capita 186 7.2858 1.3572 4.6471 10.1517

268 The Journal of Law, Economics, & Organization, V15 N1

AppendixB Independentvariablesbycountry CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Afghanistanafg0.4484001000.000.0099.300.700.36675.2644 Albaniaalb0.0017010000.000.0020.5079.500.45566.0638 Algeriadza0.2937001000.000.5099.100.400.31117.4568 AmericanSamoaasm1000076.0020.600.003.400.15788.1864 Andorraado001000.5099.100.000.400.4700 Angolaago0.77280010019.8068.700.0011.500.13676.4080 AntiguaandBarbudaatg0.00001000042.2010.200.4047.200.18928.4185 Argentinaarg0.1769001002.7091.600.205.500.37788.1177 Armeniaarm010000.000.000.00100.000.44447.2282 Arubaabw001008.0086.000.006.000.1367 Australiaaus0.11281000023.5029.600.2046.700.30009.3327 Austriaaut0.0332000106.5088.800.604.100.52449.3520 Azerbaijanaze0.0000010000.000.0093.406.600.44786.8773 Bahamas,Thebhs0.00001000047.2025.500.0027.300.26838.8955 Bahrainbhr100000.900.8095.003.300.28898.9605 Bangladeshbgd0.0000100000.200.2085.9013.700.26675.0582 Barbadosbrb0.07331000033.205.900.2060.700.14568.2713 Belarusblr010000.0014.000.0086.000.55897.9818 Belgiumbel0.3638001000.4090.001.108.500.56119.3566 Belizeblz0.40911000013.2066.800.0020.000.19067.0908 Beninben0.6831001002.8018.5015.2063.500.10335.7114 Bermudabmu0.00001000027.0018.600.0054.400.35789.6338 Bhutanbtn0.4375100000.000.005.0095.000.30335.9807 Boliviabol0.5994001002.3092.500.005.200.18896.2779 BosniaandHerzegovinabih010004.0015.0040.0041.000.4889 Continued

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Botswanabwa0.37751000026.809.400.0063.800.24447.1306 Brazilbra0.0558001004.0087.800.108.100.11117.5254 Bruneibrn0.5000100001.103.2064.2031.500.047810.0455 Bulgariabgr0.1157010000.400.5010.6088.500.47787.6232 BurkinaFasobfa0.5467001001.609.0043.0046.400.14445.3379 Burundibdi0.0133001004.9078.300.9015.900.03675.1779 Cambodiakhm0.1335010000.100.102.4097.400.14445.3566 Camerooncmr0.85200010018.1035.0022.0024.900.66676.4922 Canadacan0.37621000029.6046.600.6023.200.66679.4392 CapeVerdecpv0.3750001003.0095.900.001.100.17786.1755 CaymanIslandscym1000092.402.600.005.000.2144 CentralAfricanRepubliccaf0.78560010050.0033.103.2013.700.07785.6565 Chadtcd0.66620010011.6021.0044.0023.400.16675.0508 Chilechi0.0506001001.9082.100.0016.000.33337.5252 Chinachn0.2333010000.000.002.4097.600.38895.9946 Colombiacol0.0558001000.9096.600.202.300.04446.9396 ComorroIslandcom1.0000001000.100.1099.700.100.13446.0981 Congocog0.66930010024.9053.900.4020.800.01116.6613 CostaRicacri0.0532001005.8090.500.003.700.11117.2865 Coted’Ivoireciv0.8565001004.7018.5024.0052.800.08896.5819 Croatiahrv010000.4076.501.2021.900.50117.9181 Cubacub010000.8032.000.0067.200.2367 Cypruscyp0.3000100000.601.3018.5079.600.38898.6090 CzechRepubliccze010004.6039.200.0056.200.54948.0889 Denmarkdnk0.02750000195.200.600.204.000.62229.5613 Continued

270 The Journal of Law, Economics, & Organization, V15 N1

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Djiboutidji0.7143001000.206.7090.602.500.1256 Dominicadma0.5000100008.3089.800.001.900.14787.1474 DominicanRepublicdom0.0108001001.4096.600.002.000.21116.8041 Ecuadorecu0.3254001001.9096.400.001.700.02226.8946 Egypt,ArabRepublicegy0.0231001000.200.2081.8017.800.30006.2851 EquatorialGuineagnq0.6250001004.9071.300.5023.300.02225.9369 Eritreaeri001000.0033.000.1667 Estoniaest0100066.002.000.0131.990.65568.1819 Ethiopiaeth0.6771001003.800.7031.4064.100.08894.9923 FaroeIslandsfro0010099.800.100.000.100.6889 Fijifji0.80001000039.109.007.8044.100.20007.3458 Finlandfin0.10500000193.100.100.006.800.71119.4051 Francefra0.1455001002.4076.403.0018.200.51119.4229 FrenchPolynesiapyf0010054.0039.400.006.600.16678.4025 FrenchGuianaguf001003.9087.001.008.100.04447.6704 Gabongab0.79670010018.8065.200.8015.200.01118.2050 Gambia,Thegmb0.7804100000.401.9084.8012.900.14765.6013 Georgiageo010000.001.0011.0088.000.46677.1468 Germanyadeu0.04380001046.4035.000.0218.580.566710.1517 Ghanagha0.70611000025.8018.7015.7039.800.08895.8978 Greecegrc0.0778001000.100.401.5098.000.43338.3488 Greenlandgrl0010098.600.100.001.300.8000 Grenadagrd0.00001000013.2064.400.2022.200.13417.7341 Guadeloupeglp0.0000001001.9095.101.101.900.17947.8429 Guamgum1000016.4079.500.004.100.1476 Continued

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Guatemalagtm0.4767001004.9094.000.001.100.17006.8143 Guineagin0.7598001000.101.1069.0029.800.12226.1712 Guinea-bissaugnb0.8500001000.6010.2038.3050.900.13335.2666 Guyanaguy0.23781000018.0018.009.0055.000.05566.2404 Haitihti0.06440010012.8082.600.004.600.21115.5458 Hondurashnd0.0974001002.6095.800.101.500.16676.3762 HongKonghkg0.2368100007.507.900.5084.100.24618.9795 Hungaryhun0.06510100021.6053.900.0024.500.52227.8221 Icelandisl0.10000000196.600.700.002.700.72229.5796 Indiaind0.7422100001.101.3011.6086.000.22225.5215 Indonesiaidn0.6906001004.802.7043.4049.100.05566.1649 Iranirn001000.000.1097.902.000.35567.8999 Iraqirq001000.001.8095.802.400.3667 Irelandirl0.0904100001.1095.300.003.600.58898.7672 IsleofManimy1000020.9010.000.0069.100.6017 Israelisr0.3271100000.201.008.0090.800.34788.8921 Italyita0.0389001000.4083.200.1016.300.47229.1711 Jamaicajam0.01251000055.509.600.1034.800.20177.1416 Japanjpn0.0099000100.900.600.0098.500.40009.5834 Jordanjor0.0297001000.301.7093.005.000.34447.3947 Kazakstankaz010002.003.0047.0048.000.53337.5571 Kenyaken0.82701000019.3026.406.0048.300.01115.7304 Kiribatikir0.50001000045.3049.000.005.700.01396.6948 Korea,Southkor0.00000001012.203.900.0083.900.41118.0338 Korea,DemocraticRep.prk010000.000.000.00100.000.4444 Continued

272 The Journal of Law, Economics, & Organization, V15 N1

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Kuwaitkwt001000.102.1095.102.700.32569.5581 KyrgyzRepublickgz010000.000.0070.0030.000.45566.9497 Lao,People’sDem.R.lao0.2500010000.200.801.0098.000.20005.5703 Latvialva0100014.1018.200.0167.690.63338.0794 Lebanonlbn0.1140001001.0036.2037.4025.400.37227.4989 Lesotholso0.20981000029.8043.500.0026.700.32566.0115 Liberialbr0.80311000018.601.9021.2058.300.07006.1408 Libyalby0.1214001000.100.2098.101.600.27788.7087 Liechtensteinlie0001010.7087.900.001.400.5233 Lithuanialtu0100080.000.000.62227.8258 Luxembourglux0.2167001001.2093.000.005.800.54949.8336 Macaomac001000.508.800.0090.700.2456 Macedoniamkd010001.000.5030.1068.400.46116.7511 Madagascarmdg0.06270010022.0026.001.7050.300.22225.6334 Malawimwi0.62241000031.5027.6016.2024.700.14785.0679 Malaysiamys0.6104100001.402.8049.4046.400.02567.4685 Maldivesmdv0.0333100000.000.1099.900.000.03506.5399 Malimli0.8086001000.200.7080.0019.100.18895.2571 Maltamlt0.1033001000.5097.300.002.200.39448.1821 MarshallIslandsmhl100000.000.000.1000 Martiniquemtq0.0000001002.2095.500.102.200.16007.9817 Mauritaniamrt0.2700001000.000.3099.400.300.22225.9818 Mauritiusmus0.7085001000.9031.2016.4051.500.22417.5414 Mayottemyt001000.300.9098.800.000.1389 Mexicomex0.1741001001.2094.700.004.100.25567.7009 Continued

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Micronesia,Fed.Statesfsm1000049.2045.600.005.200.07287.5756 Moldovamda010000.000.000.00100.000.52227.2097 Monacomco001004.6090.700.004.700.4827 Mongoliamng0.0737010000.000.001.4098.600.51116.9417 Moroccomar0.3480001000.000.2099.400.400.35566.6175 Mozambiquemoz0.7863001006.8031.4013.0048.800.20174.7198 Myanmarmmr0.3840010003.200.903.6092.300.2444 Namibianam0.72831000064.2019.100.0016.700.24447.4553 Nepalnpl0.4500100000.000.003.0097.000.31114.9977 Netherlandsnld0.06340010042.4042.601.0014.000.58119.3772 NetherlandsAntillesant0.1389001009.2087.200.103.500.13508.7041 NewZealandnzl0.14761000037.9018.700.0043.400.45568.9693 NewCaledoniancl0010018.1072.504.005.400.23678.6326 Nicaraguanic0.0992001004.4094.700.000.900.14446.3723 Nigerner0.7329001000.000.2087.9011.900.17785.6140 Nigerianga0.85671000015.8012.1045.0027.100.11116.3670 Norwaynor0.06990000197.800.300.101.800.68899.6846 Omanomn001000.100.1098.900.900.23338.2575 Pakistanpak0.6216100000.800.5096.801.900.33335.7316 Panamapan0.1908001005.2085.004.505.300.10007.5004 PapuaNewGuineapng0.80271000058.4032.800.008.800.06676.6082 Paraguaypry0.4111001001.9096.000.002.100.25566.9660 Peruper0.4316001002.7095.100.002.200.11117.0173 Philippinesphl0.7238001003.8084.104.307.800.14446.3657 Polandpol0.0390010000.1081.000.0018.900.57787.5977 Continued

274 The Journal of Law, Economics, & Organization, V15 N1

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Portugalprt0.0025001001.1094.100.004.800.43678.2380 PuertoRicopri0.0267001005.1091.500.003.400.20178.2965 Qatarqat001000.901.2092.405.500.28119.7441 Reunionreu001000.5096.302.201.000.2340 Romaniarom0.1220010005.804.901.2088.100.51117.2793 RussianFederationrus010000.001.4011.3087.300.66678.0705 Rwandarwa0.06090010011.6055.608.6024.200.02225.3901 Salvador,Elslv0.0514001002.4096.200.001.400.15006.6524 SaoTomeandPrincipestp0.0000001002.2092.400.005.400.01115.9841 SaudiArabiasau100000.100.1098.801.000.27789.1006 Senegalsen0.7789001000.105.6091.003.300.15566.1754 Seychellessyc0.0000001001.1089.300.309.300.04837.9420 SierraLeonesle0.8130100004.802.2039.4053.600.09225.5518 Singaporesgp0.3215100002.604.7017.4075.300.01369.0233 SlovakRepublicsvk010008.4074.000.0017.600.53787.9918 Sloveniasvn010000.0071.401.5027.100.51118.8777 SolomonIslandslb0.57141000039.8019.100.0041.100.08896.3531 Somaliasom0.0791100000.000.0099.800.200.11114.6471 SouthAfricazaf0.83101000039.0010.401.3049.300.32227.6137 Spainesp0.2745001000.1096.900.003.000.44448.7537 SriLankalka0.3257100000.406.807.2085.600.07785.9197 St.KittsandNeviskna0.00001000052.008.200.0039.800.19118.0191 St.Lucialca0.5833100006.3088.300.005.400.15037.9153 St.VincentAntillesvct0.00001000040.7019.400.0039.900.14616.9234 Sudansdn0.5122100000.104.4073.0022.500.16675.8957 Continued

AppendixBContinued CountryCodeEthnolig.ReligionLatitudeLogGNP Fraction.Legalorigin(percentofpopulation)percapita EnglishSocialistFrenchGermanScandin.ProtestantCatholicMuslimOtherden. Surinamesur0.75000010036.6036.0013.0014.400.04447.5038 Swazilandswz0.00001000033.9010.800.1055.200.29226.6870 Swedenswe0.06500000168.401.400.1030.100.68899.6034 Switzerlandche0.30760001043.2052.800.303.700.52229.8667 SyrianArabRepublicsyr0.0948001000.201.3089.608.900.38897.0188 Taiwantai0.2551000103.001.500.5095.000.25898.6052 Tajikistantjk010000.000.0085.0015.000.43336.4547 Tanzaniatza0.89021000011.2028.2032.5028.100.06675.1980 Thailandtha0.3569100000.200.403.9095.500.16676.8697 Togotgo0.7285001006.1029.3017.0047.600.08895.7328 Tongaton0.00001000061.9017.900.0020.200.22227.1199 TrinidadandTobagotto0.23131000013.2035.806.5044.500.12228.2123 Tunisiatun0.0703001000.000.1099.400.500.37787.0194 Turkeytur0.1636001000.000.1099.200.700.43337.3620 Turkmenistantkm010000.000.0087.0013.000.44447.0838 Ugandauga0.8358100001.9049.606.6041.900.01115.6250 Ukraineukr010000.000.000.00100.000.54447.7826 UnitedStatesofAmericausa0.20901000043.6030.000.8025.600.42229.6180 UnitedArabEmiratesare0.0000100000.300.4094.904.400.26679.9490 UnitedKingdomgbr0.10631000016.1013.101.4069.400.60009.1654 Uruguayury0.0667001001.9059.500.0038.600.36677.7373 Uzbekistanuzb010000.000.0088.0012.000.45566.9233 Vanuatuvut0.54411000054.6016.900.0028.500.17786.9703 Venezuelaven0.0525001001.0094.800.004.200.08898.0399 Vietnamvnm0.1176010000.203.901.0094.900.17785.3148 Continued

276 The Journal of Law, Economics, & Organization, V15 N1

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