Chapter 6 A country s GDP divided by the size of its population Often used as a Key Terms GDP A measurement of all the goods and services produced in a single country over a specified unit of time typically a year We can think of this measure as the country s wealth GDP per capita measure economic development Modernization Theory Seymour Martin Lipset all societies through the same development process will eventually look like today s developed countries All societies gradually move from immature traditional to mature modern As they mature they become more complex economically While dictatorships might work well for simple economies but they are insufficient for managing complex economies Ultimately this makes dictatorships unstable in developed countries and democracy unstable in developing countries Survival Story focuses on micro level processes from the perspective of a citizen in a democracy Assume that income is distributed in a highly unequal fashion in a dictatorship Dictators inner circle does very well while those outside the inner circle do not in a democracy where redistributive policies are more likely income is disturbed more equally suppose the democracy is poor small chance of gain with little risk suppose the democracy is rich small chance of gain with huge risk Sovereign debt refers to debt that is accrued by the sovereign that is the government Credible commitment problem Time inconsistency problem occurs when 1 an actor who makes a promise today may have an incentive to renege on that promise in the future and 2 power is in the hands of the actor who makes the promise and not in the hands of those expected to benefit from the promise Quasi rent a difference between an assets value and its short run opportunity cost Fixed asset Assets that are not easily converted into cash farmland houses manufacturing equipment manufacturing plants land Liquid asset Assets that are easily converted into other types of assets typically cash cash bank deposits government bonds stocks Mobile asset stronger exit option Rentier state a state that derives all or a substantial portion of its revenue form the rent sale of indigenous natural resources to external clients Natural resource naturally occurring substances that are usually considered valuable such as oil diamonds and minerals Resource curse refers to the paradox that countries with an abundance of natural resources tend to experience things like poor governance low levels of economic development civil war and dictatorships In the Middle East and Sub Saharan Africa governments are able to use natural resources to maintain sovereign wealth rather than becoming reliant on citizen loyalty Even though incomes rose dramatically with the discovery of oil and minerals these countries largely remain authoritarian Foreign aid aid in the form of money food technical assistance military weapons and the like that people in one country give to another This aid can come from national governments intergovernmental organizations or private donations Dependent variable the outcome we are trying to explain Independent variable the variable used to explain the outcome Explanatory variable another name for independent variable same meaning Non renewable resources resources such as oil Renewable resources something that can be made again such as food or cartons What do GDP and GDP per capita measure GDP measures all the goods and services produced in a single country over a specified unit of time typically a year We can think of this measure as the country s wealth GDP per capita is a measurement of a country s GDP divided by the size of its population Often used as a measure economic development What implications do Modernization Theory and Survival Story share democracy is more common in rich countries than in poor countries transitions to dictatorship become less likely as income increases What is the critical test that differentiates Modernization Theory and Survival Story 1 Modernization The probability that a dictatorship transitions to a democracy democratic transition increases as GDP per capita increases 2 Survival the probability that a dictatorship transitions to a democracy democratic transition does not increase as GDP per capita increases How do you interpret coefficients Sign and significance method Results of regression are presented in tables these tables often display estimated coefficients standard errors and an indication of significance p value t value stars Significance Before the first step check that your variable of interest is not multiplied by another variable in some other term If the model has multiplicative terms we need more complicated tools for interpretation first see if a coefficient of interest is significant abs t about 2 p 05 se coef 2 one or more stars 95 confidence interval does not contain zero if the coefficient is significant move to the next step if the coefficient is not significant we cannot be confident that the effect is either negative or positive Sign if the coefficient is significant we can be confident that the variable has either a positive or negative relationship with the outcome To know which look at the sign of the coefficient positive sign positive relationship negative sign negative relationship How do we compare income across countries By measuring the amount of income per person in an economy Using GDP and GDP per capita income is the most commonly used indicator of development because countries tend to become richer as they develop What is a confidence interval what does it tell us about our hypothesis How can we fix the credible commitment problem political solutions enforceable contracts repeated interactions and institutions that alter the distribution of power Chapter 7 Key Terms Primordialist arguments treat culture as something that is objective and inherited something that has been fixed since primordial ancient times Montesquieu Culture is fixed Constructive arguments treat culture as something that is constructed or invented rather than inherited Mills Culture is malleable Cultural modernization theory argues that socioeconomic development does not directly cause democracy instead economic development produces certain cultural changes such as the emergence of a civic culture and is these changes that ultimately produce democratic reform Inglehart Civic culture conceptualized as a shared cluster of attitudes that include things like a high level of interpersonal trust a
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