Component 1 (Macro): Quantitative (Regression) Analysis

This chapter corresponds to the macro-quantitative component. It discusses how competitiveness and corruption were modelled, how the methods were applied in the correlation analysis and which empirical results were achieved.Regression analysis is used to test the relationship between variables of some prominent prosperity/corruption theories. This part does not seek to prove causation, but instead empirically explores whether competitiveness/transparency are related to indicators such as state religion or a population’s religious affiliation.Consistent results of the models on competitiveness (GCI) are: (1) a positive influence of EPI on GCI; (2) a positive influence of a German legal origin (or German language) on GCI; (3) a negative influence of an Orthodox population on GCI; and (4) a negative influence of a Roman Catholic population (or Roman Catholic State Religion) on GCI. These results are also consistent with the predictions in the theory chapters (Chaps. 10.1007/978-3-030-78498-0_6–10.1007/978-3-030-78498-0_11).The corruption model applied here tests the interrelations between GDP, political liberties (democracy proxy), and language and ethnic fractionalisation. The results of the models on corruption are entirely compatible with theory. The results confirm my hypothesis that transparency levels are directly (i.e. positively) related to the proportion of Protestants in countries in Europe and the Americas.

Ethnic Identity in American History and America’s Exceptional Religiosity: Theory and Some Evidence

Why is religiosity in contemporary America exceptionally high relative to those in other rich countries? I develop a simple theory that hinges on the sense of security of immigrant-identity, which is informed by both religion and ethnicity. Commitments to religion and to ethnicity are complementary in the determination of identity, and immigrants consciously invest in the endogenous component of their sense of identity through the actions they choose (like socialising with an ethnic group or performing religious activities). I demonstrate that the level of religiosity increases with the extent of ethnic fractionalisation in the society. I offer some empirical evidence for the theory using contemporary cross-sectional data from the 50 states of the US. I test this theory against two alternative theories that have been offered to explain the high American religiosity. I find a robust positive and statistically significant correlation between religiosity and state-level ethnic fractionalisation. When tested with world data, the model is rejected — lending further support for the claim that America’s religiosity derives from its unique history of exceptionally high and ethnically diverse immigration.

Measuring the Middle Class in Africa – Income Versus Assets Approach

Traditionally, economists measure middle class from the income perspective. Considering quality of data for many African countries, relying solely on income may, unfortunately, lead to an incorrect picture. This article compares and analyses the African middle class measured by income and by ownership of assets. Results indicate that middle class sizes differ significantly in some countries, while in others they are more or less the same. Regression analyses performed to investigate potential correlates of the African income and assets middle class sizes indicate that the African assets middle class size is positively associated with income per capita and negatively with assets inequality. To a lesser extent, it is positively affected by education and negatively by ethnic fractionalisation. The African income middle class size depends positively on income per capita and education, while negatively on income inequality.

Linking precolonial institutions with ethnic fractionalisation: what are we measuring?

This paper highlights a link between measures for precolonial institutions and ethnic fractionalisation in postcolonial countries. A conceptual explanation is provided for why countries that were more politically centralised in precolonial times should be less ethnically fractionalised in current times. This result is confirmed for a sample of postcolonial countries in Africa, Asia and the Pacific. This is followed by a comparative case study in the South Pacific countries of Papua New Guinea, Tonga and Samoa. It is hoped that these results will lead to further empirical work focused at delving deeper into the link between these two measures to better understand what they are actually measuring, and why both are so closely related to economic development.

Historical institutional determinants of financial system development in Africa

The literature on the determinants of cross-country variation in financial system development identifies historical institutional factors, mostly rooted in colonial effects, as key causes. Using a sample of 39 African former European colonies for 2006–11, this paper investigates the extent to which the historical institutional determinants identified by legal origins, disease endowment, religion-based and ethnic fractionalisation theories explain current differences in financial system development across Africa. While most existing research focuses only on one financial system development dimension, namely financial system depth, this article considers also financial system access. The results do not support any of the above theories when depth measures are used, while three of them (legal origins, disease endowment and ethnic fractionalisation theories) are validated when using access measures. This suggests that in Africa financial system depth and access do not have common historical institutional determinants, pointing to the need for greater fine tuning of prevalent theories and empirical measures.