What drives liberal policies in developing countries?

Vatcharin Sirimaneetham

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

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.

Keywords: liberal policy; economic freedom; economic growth; Bayesian model averaging; principal components (search for similar items in EconPapers)
JEL-codes: C10 O11 O40 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2006-06
New Economics Papers: this item is included in nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:06/587

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