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What drives liberal policies in developing countries?

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  • Vatcharin Sirimaneetham

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Abstract

This paper investigates why governments in some developing countries have adopted more liberal policies than others. To construct a composite policy index, the paper applies a robust principal components analysis to Washington Consensus policy variables. The paper shows that income growth is higher in countries with more liberal policies. Using a Bayesian approach which addresses the model uncertainty problem, this study finds that government policies are more liberal in countries which possess right-wing or centrist governments, have greater political stability, and are former Spanish colonies. In contrast, countries which are less ethnically diverse, are former French colonies, and have a military leader tend to implement less liberal policies.

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Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 06/587.

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Length: 61 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:bri:uobdis:06/587

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Keywords: liberal policy; economic freedom; economic growth; Bayesian model averaging; principal components;

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