Professor Mark J. Perry's Blog for Economics and Finance
THE ECONOMIST--The better a government upholds the rule of law, the more likely its people are to be richer: every rich country, with the exception of Italy and Greece, scores well on rule-of-law measures (see chart above). Most poor countries do not.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
4 Comments:
Unfortunately, there is no information provided about the chart. Looks worth a visit to the World Bank website to find the original report.
If a country can't secure property rights, if it does not have the ability to uphold contracts b/w parties, or if it does not have a judicial system that is above corruption then it's economic and financial system is doomed. See Milton Friedman's "Capitalism and Freedom." I'm curious about outliers Italy and Greece though.
Correlation equals causation?
I think not.
Perhaps only rich societies can afford an expensive legal culture such as ours. That would explain your outliers, some countries simply choose not to buy.
The way the scatterplot looks, maybe a logarithmic function might be a better fit than a linear one. Or is that just me?
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