Civil Liberty-an Econometric Investigation

Abstract

SUMMARY Many governments allocate resources to the repression of the political freedom of their citizens. The dominant economic theory of this activity, associated most prominently with the work of HAYEK, is that political repression is a bi‐product of the erosion of economic freedom. This theory predicts that civil liberty will be positively correlated with the degree of economic freedom. An alternative view, derived from models of industrial behavior, is that monopolistic governments will use political repression to protect their property rights, so that concentrated party systems will tend to engage in more repression than competitive systems. Using a cross‐sectional sample of 184 states in 1979, an empirical test of the two hypotheses is presented and the evidence is shown to be more consistent with the second hypothesis. In addition, the correlation between civil liberty and a variety of economic variables is examined: the degree of civil liberty is found to positively related to the level of real per capita income and to the ratio of wage and salary payments to total income. The Gastil index of civil liberty provides the empirical foundation for the study.

Institutions and the convergence hypothesis: The cross-national evidence

“…Barro (1991) proxies property rights with counts of revolutions, coups, and assassinations. Others have employed Gastil's Freedom in the World (1983) subjective indexes of civil liberties and political freedoms in cross-country growth equations (e.g., Scully, 1988;Bilson, 1982;McMillan, Rausser and Johnson, 1991). Finally, there is a large literature on the relationship between democracy and economic performance.…”

Liberty and development: A further empirical perspective

“…There may be m~ utual causality or y may cause EF, CL, etc. Bilson (1982) might be interpreted as empirically investigating and supporting the latter hypothesis by OLS estimation using ~L as the dependent variable and GNP as one of six "independent" variables (only GNP and (Wages + Salari~es)/GNP were statistically significant; the corrected R squared was .57. Four of the other variables were in ratio form with GNP in the denominator and, thus, obviously they were endogenous).…”

“…However, given the presumed relative speeds of adjustment of government versus the market, the idea that "economic freedom now 'causes' income(wealth) now" seems more plausible than the idea that "income now 'causes' economic freedom (or civil liberties) now". Thus, simultaneous estimation techniques seem inappropriate for establishing causality in this case with this particular cross-section data set: Bilson (1982) put it best: "In the l~ure cross-section model, causal inferences are difficult to make since the model only yields correlations between variables." One simple approach (that will be possible once enough time has elapsed since the construction of the Wright data set to encompass complete commodity-price cycles and business cycles) would be to use a decade or more change in GNP as the dependent variable in a regression with the 1982 freedom indices as the predetermined or independent variables.…”

Social capital, growth, and poverty: a survey of cross-country evidence

“…Bilson (1982) shows that civil liberties are strongly associated with per capita income (and positively but not significantly related to recent income growth), but his interpretation is that economic performance determines freedoms rather than the other way around. The Gastil ratings were constructed beginning in 1973.…”