the effect of ethnic and religious conflict on growthmontalvo/wp/rel_ethn.pdfthe effect of ethnic...

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The Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo * IVIE and Department of Economics Universitat Pompeu Fabra and Marta Reynal-Querol Institut d’Analisis Economic (CSIC) Abstract This paper analyzes the role that different dimensions of ethnicity plays in the process of growth of a country. We cover essentially four issues. First, and in contrast with the ethnic characteristics considered in other studies, this paper emphasizes the importance of religious conflict in the explanation of economic growth. Second we consider an index of polarization, instead of the traditional index of fragmentation, in order to measure conflict. We provide a theoretical justification for the index based on rent-seeking models. Third, we elaborate a database on religious diversity within countries and finally we analyze the channels through which religious polarization affects growth. The main finding is that religious conflict, measured as a polarization index, is an important factor in explaining economic growth and the so called ``Africa's growth tragedy''. We show that, when religious polarization is included in growth regressions together with ethnolingustic fragmentation this last one turns out to be insignificant while the former is an important determinant of economic growth and, in particular, of the poor economic performance of Africa (JEL: O11, Z12, O55). Keywords: Religious polarization, Africa’s growth tragedy, growth regression. * Corresponding author: Jose G. Montalvo, Department of Economics, Universitat Pompeu Fabra, C/ Ramon Trias Fargas 25-27, Barcelona 08005. Phone: (34) 93 542 2509. Fax: (34) 93 542 17 46. Email: [email protected].

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Page 1: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

The Effect of Ethnic and Religious Conflict on Growth

Jose G. Montalvo* IVIE and Department of Economics

Universitat Pompeu Fabra

and

Marta Reynal-Querol Institut d’Analisis Economic (CSIC)

Abstract This paper analyzes the role that different dimensions of ethnicity plays in the process of growth of a country. We cover essentially four issues. First, and in contrast with the ethnic characteristics considered in other studies, this paper emphasizes the importance of religious conflict in the explanation of economic growth. Second we consider an index of polarization, instead of the traditional index of fragmentation, in order to measure conflict. We provide a theoretical justification for the index based on rent-seeking models. Third, we elaborate a database on religious diversity within countries and finally we analyze the channels through which religious polarization affects growth. The main finding is that religious conflict, measured as a polarization index, is an important factor in explaining economic growth and the so called ``Africa's growth tragedy''. We show that, when religious polarization is included in growth regressions together with ethnolingustic fragmentation this last one turns out to be insignificant while the former is an important determinant of economic growth and, in particular, of the poor economic performance of Africa (JEL: O11, Z12, O55). Keywords: Religious polarization, Africa’s growth tragedy, growth regression. * Corresponding author: Jose G. Montalvo, Department of Economics, Universitat Pompeu Fabra, C/ Ramon Trias Fargas 25-27, Barcelona 08005. Phone: (34) 93 542 2509. Fax: (34) 93 542 17 46. Email: [email protected].

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Page 37: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

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Page 38: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

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Page 39: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

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Page 40: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 1

POOLED REGRESSIONS USING BARRO (1991) SET OF EXPLANANTORY VARIABLES Dependent variable:log difference GDP per capita, five years period from 1960 to 1989.

Model 0 1 2 3 4 5 6 7 Const 0.52

(6.77) 0.67 (7.18)

0.74 (7.41)

0.67 (7.11)

0.61 (6.89)

0.78 (7.50)

0.83 (7.71)

0.72 (6.74)

Inv 0.556 (5.35)

0.48 (4.43)

0.47 (4.30)

0.50 (4.53)

0.55 (2.28)

0.46 (4.15)

0.45 (4.02)

0.58 (5.70)

L(int.gdp) -0.06 (-5.48)

-0.06 (-5.84)

-0.07 (-6.01)

-0.07 (-6.05)

-0.07 (-6.04)

-0.08 (-6.46)

-0.08 (-6.62)

-0.08 (-6.60)

Sec 0.13 (2.49)

0.12 (2.33)

0.13 (2.41)

0.13 (2.46)

0.14 (2.64)

0.13 (2.44)

0.13 (2.47)

0.13 (2.44)

Pri 0.05 (1.45)

0.06 (1.56)

0.06 (1.48)

-0.08 (1.83)

0.06 (1.72)

0.06 (1.46)

0.06 (1.38)

0.01 (0.21)

Gov -0.53 (-4.66)

-0.48 (-3.86)

-0.49 (-4.03)

-0.66 (-5.39)

-0.59 (-5.14)

-0.57 (-4.54)

-0.56 (-4.52)

-0.44 (-3.83)

Rev 0.41 (3.05)

0.41 (2.99)

0.42 (3.11)

0.42 (3.11)

0.41 (3.03)

0.41 (3.01)

-0.41 (-3.04)

0.41 (3.03)

Ass -0.61 (-3.14)

-0.60 (-3.08)

-0.62 (-3.20)

-0.63 (-3.19)

-0.61 (-3.12)

-0.61 (-3.11)

-0.62 (-3.15)

-0.62 (-3.15)

Coup 0.04 (0.56)

0.06 (0.87)

0.06 (0.87)

-0.01 (-0.9)

-0.01 (-0.97)

-0.02 (-0.99)

-0.01 (-1.05)

-0.01 (-0.90)

Pish -0.02 (-1.00)

-0.03 (-1.54)

-0.03 (-1.47)

-0.02 (-0.96)

-0.01 (-0.78)

-0.03 (-1.40)

-0.03 (-1.45)

-0.01 (-0.33)

Ppdev -0.05 (-2.24)

-0.03 (-1.41)

-0.03 (-1.51)

-0.00 (-0.02)

-0.01 (-0.19)

0.01 (0.42)

0.01 (0.44)

-0.01 (-0.56)

Laam -0.45 (-2.57)

-0.04 (-1.97)

-0.04 (-2.08)

0.06 (-2.88)

-0.06 (-3.09)

-0.05 (-2.53)

-0.05 (-2.58)

-0.05 (-2.28)

Asiae 0.08 (3.27)

0.08 (2.43)

0.10 (2.94)

0.08 (2.33)

0.09 (3.37)

0.09 (2.59)

0.10 (2.86)

0.11 (3.96)

safrica -0.04 (-1.78)

IRC1 -0.09 (-2.89)

-0.07 (-2.43)

IRC2 -0.33 (-3.43)

-0.16 (-2.98)

AD -0.17 (-3.44)

-0.15 (-3.23)

-0.16 (-3.16)

-0.16 (-3.15)

-0.15 (-2.14)

Lpop -0.00 (-0.03)

-0.00 (-0.46)

-0.00 (-0.16)

-0.00 (-0.17)

-0.00 (-0.88)

R2 0.2525 0.2741 0.2791 0.2767 0.2659 0.2853 0.2896

0.2629

N 515 515 515 511 511 511 511 511 Set of explanatory variables Barro (1991) Dummies for each religion have been used in order to isolate the effect of polarization, except for regression 4, in which just the dummy for the animist religion has been used. Numbers in parentheses are t-statistics. Inv: Average of the ration of real domestic investment for the period (private plus public) to real GDP. L(int.gdp): Real GDP per capita of the initial period (1985 international prices) Sec: Percentage of secondary school attained in the total population. Taken at the beginning of the period Pri: Percentage of ``Primary school attained'' in the total population. Taken at the beginning of the period. Gov: Average period of the Ratio of real government ``consumption''expenditure net of spending on defense and on education to real GDP. Rev: Number of revolutions per year, averaged over the period (Banks). Ass: number of assassassination per milion population per year, average period. Coups: number of coups per year, average period. Pish: Price level of investment (PPP I / Xrate relative to U.S.) at the begining of the period. (U.S=1.0). ppdev: Magnitude of the deviation of Pish560 from the sample mean. Laam: Dummy for Latin-American countries. Asiae: Dummy for East-Asian countries.Safrica: Dummy variable for Sub Saharan countries. lpop: log of the population al the begining of the period IRC1: religious polarization index IRC2: religious polarization using the application of Esteban and Ray polarization index AD: Animist diversity index

Page 41: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 2:

DECOMPOSITION EFFECT OECD SAFRICA LAAM ASIAE Growthmean 0.1417 0.039 0.0622 0.1079 Diff growth 0 -0.102 -0.08 0.046 IRC1 Mean 0.0787 0.7047 0.4278 0.5064 Diff IRC1 0 0.626 0.3491 0.4278 AD Mean 0.0003 0.2198 0.0047 0.0734 Diff AD 0 0.2196 0.0044 0.0732 Elf mean 0.2187 0.6513 0.2657 0.46222 Diff Elf 0 0.4326 0.046 0.2435 Effect IRC1 0 -0.05 -0.028 -0.034 Effect AD 0 -0.056 -0.001 -0.018 Effect Inv 0 -0.0870 -0.06 -0.034 Effect elf 0 -0.00865 -0.00092 -0.0048 OXACA DECOMPOSITION OECD SAFRICA LAAM ASIAE

Effect1 0 -0.199 0.0073 0.3108 IRC1 Effect2 0 -0.0427 -0.0159 0.039 Effect1 0 -0.018 -0.0033 -0.058 AD Effect2 0 -0.00025 -0.00042 -0.00043 Effect1 0 -0.0957 -0.075 -0.0458 Investment

Effect2 0 0.045 0.056 0.629 Effect1 0 0.00978 -0.0021 -0.0207 ELF Effect2 0 -0.0083 -0.01 0.0102

All differences respect the OECD mean, that is (mean of variable I in region j) - (mean of variable I in oecd). The effect in the first decomposition comes from the product between the coefficient of variable I in regression in table 1, mutiplied by the difference just describes above. We decompose the effect for variable IRC1, AD, investment as a matter of comparison, and ELF. In the OXACA decomposition, we run regression for each region, obtaining a different Beta coefficient of the variable of interest in each region. Effect 1 correspond to differnces in the mean weighted by the coefficient of the Variable obtained in the regressions using just the region sample. And effect two corresponds to the coefficient effect, measured as the difference in coefficients, weighted by the mean of the variable in the corresponding region. Inv: Average of the ration of real domestic investment for the period (private plus public) to real GDP. Safrica: Dummy for Sub-Saharan African countries.; Laam: Dummy for Latin-American countries. Asiae: Dummy for East-Asian countries. IRC1: religious polarization index IRC2: religious polarization using the application of Esteban and Ray polarization index AD: animist diversity index ELF: ethnolinguistic fragmentation index.

Page 42: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 3 RANKING OF THE MOST POLARIZED, MOST ANIMIST DIVERS, AND MOST LINGUISTICALLY FRAGMENTED COUNTRIES MOST POLARIZED IRC1

MOST ANIMIST DIV AD

LEAST POLARIZED IRC1

MOST LING. FRAGMENTED ELF

Dom.repu 0.999 Zaire 0.77 Oman 0.029 Tanzania 0.93 Zaire 0.993 Nigeria 0.7615 Luxemburg 0.029 Zaire 0.9 Burundi 0.987 Kenya 0.508 Afganistan 0.027 Uganda 0.9 Madagascar 0.972 Mozambique 0.47 Iceland 0.026 Cameroon 0.89 Leshoto 0.96 Indonesia 0.46 Turkey 0.022 India 0.89 Zimbawe 0.958 Ethiopia 0.36 Sweden 0.018 South Africa 0.88 Bolivia 0.957 South Africa 0.28 Denmark 0.014 Nigeria 0.87 Fiji 0.928 Madagascar 0.249 Italy 0.009 Coted’ivoire 0.86 Sierra Leone 0.924 Tanzania 0.23 Comoros 0.008 Liberia 0.83 Taiwan 0.919 Ghana 0.214 Dominica 0.008 Chad 0.83 Burkina Faso 0.918 Cameroon 0.206 Finland 0.006 Kenya 0.83 Guinea Bissau 0.914 Sudan 0.20 Norway 0.006 Zambia 0.82 Ethiopia 0.906 Burkina Faso 0.20 Somalia 0.005 Mali 0.78 Angola 0.906 Uganda 0.19 Ireland 0.005 Angola 0.78 Cent. Afr. Rep 0.901 Cote d’Ivoire 0.167 Cape Verde 0.004 Sierra Leone 0.77 The Fifteen most polarized countries, the most animist divers, and the most linguistic fragmented following the index IRC1, AD and ELF. And the fifteen least polarized .

TABLE 4: ANALYSIS OF ROBUSTNESS USING DIFFERENT SET OF EXPLANATORY VARIABLES, INDEX

AND DATABASE.

CONFLICT INDEX

USING ESTEBAN AND RAY INDEX

IRC1

AD

R2

IRC2

R2

Variables Specif.

Sample N

Data -0.09 (-2.89)

0.2741 -0.33 (-3.43)

0.2791 Barro Barrolee N=515

WC -0.4 (-1.33)

0.2639 -0.15 (-1.75)

0.2658 Barro Barrolee N=514

Data -0.13 (-3.81)

0.2168 -0.42 (-4.13)

0.2210 Lev&Ren. Barrolee N=485

Pool

WC -0.09 (-2.77)

0.2107 -0.22 (-2.25)

0.2063 Lev&Ren. Barrolee N=481

Data

-0.17 (-3.44)

0.2767 Barro Barrolee N=511

WC

-0.21 (-3.14)

0.2728 Barro Barrolee N=509

Data -0.29 (-4.03)

0.2085 Lev&Ren.

Barrolee N=481

WC -0.30 (-4.03)

0.2058 Lev&Ren.

Barrolee N=481

Pool

Data means that the results are obtained by using the data set proposed in this paper. An dWC means that the results are obtained using the WC Encyclopedia dataset. Barro means that the results are obtained using Barro (1991) set of explanatory variables. Lev&Ren means that the results are obtained using Levine and Renelt (1992) set of explanatory variables. Numbers in parentheses are t-statistics. IRC1: religious polarization index; IRC2: religious polarization using the application of Esteban and Ray polarization index AD: animist diversity index

Page 43: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 5: ANALYSIS OF ROBUSTNESS USING THE RANDOM EFFECTS ESTIMATION PROCEDURE

CONFLICT INDEX

ESTEBAN AND RAY INDEX

IRC1

AD

R2

IRC2

R2

Variables Specif.

Sample N

Data -0.09 (-2.86)

0.2733 -0.35 (-3.39)

0.2785 Barro Barrolee N=515

WC -0.04 (-1.28)

0.2627 -0.16 (-1.66)

0.2646 Barro Barrolee N=514

Data -0.129 (-3.79)

0.2168 -0.42 (-4.13)

0.2210 Lev&Ren. Barrolee N=485

RE

WC -0.09 (-2.66)

0.2080 -0.21 (-2.09)

0.2033 Lev&Ren. Barrolee N=481

Data

-0.24 (-3.43)

0.2765 Barro Barrolee N=511

WC

-0.25 (-2.93)

0.2785 Barro Barrolee N=509

Data -0.39 (-4.27)

0.2119 Lev&Ren.

Barrolee N=481

RE

WC -0.38 (-4.44)

0.2116 Lev&Ren.

Barrolee N=481

Data -0.08 (-2.53)

-0.25 (-3.27)

0.2979 Barro Barrolee N=511

RE

Data -0.25 (-3.37)

-0.31 (-3.15)

0.3032 Barro Barrolee N=511

WC -0.03 (-0.86)

-0.24 (-2.67)

0.2803 Barro Barrolee N=508

WC -0.25 (-2.77)

-0.15 (-1.54)

0.2832 Barro Barrolee N=508

Data means that the results are obtained by using the data set proposed in this paper. An dWC means that the results are obtained using the WC Encyclopedia dataset. Barro means that the results are obtained using Barro (1991) set of explanatory variables. Lev&Ren means that the results are obtained using Levine and Renelt (1992) set of explanatory variables. Numbers in parentheses are t-statistics. IRC1: religious polarization index; IRC2: religious polarization using the application of Esteban and Ray polarization index AD: animist diversity index

Page 44: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 6

DIRECT AND INDIRECT EFFECTS USING 3SLS ESTIMATION Dependent variable:log difference GDP per capita, five years period from 1960 to 1989 Equations GROWTH Investment Gov.exp Civil war Const

0.71 (5.62)

-0.16 (-2.86)

0.28 (5.69)

-0.54 (-2.09)

Inv

0.56 (3.97)

Ln(Int.gdp)

-0.07 (-5.26)

0.05 (9.62)

-0.01 (-1.26)

0.04 (1.33)

Sec

0.11 (1.83)

0.03 (1.05)

Pri

0.06 (1.26)

Hum

-0.02 (-2.21)

Gov

-0.59 (-4.08)

0.01 (0.19)

Rev

0.39 (2.53)

0.17 (2.42)

-0.02 (-0.28)

Ass

-0.60 (-2.61)

-0.25 (-2.36)

0.02 (0.21)

Coup

0.01 (0.25)

-0.02 (-2.34)

0.02 (2.01)

Civwar

0.04 (-2.32)

Pish

-0.03 (-1.49)

Ppdev

-0.01 (-0.44)

Ex

-0.68 (-1.58)

Ex2 0.91 (1.02)

Laam

-0.04 (-1.63)

Asiae

0.13 (2.52)

IRC1 -0.03 (-0.80)

-0.06 (-3.27)

0.05 (3.25)

0.16 (2.55)

AD

-0.24 (-2.77)

-0.03 (-0.94)

0.03 (0.99)

0.66 (4.94)

Lpop

0.00 (0.32)

0.00 (0.31)

-0.01 (-4.55)

Demo

0.01 (1.53)

R-squared 0.3826 5453 0.3281 0.3268 Dummies for each religion have been used in order to isolate the effect of polarization, Numbers in parentheses are Z-statistics. Laam: Dummy for Latin-American countries. Asiae: Dummy for East-Asian countries. gpop: average annual rate of population growth per period lpop: log of the population al the begining of the period hum: Average schooling years in the total population over age 25 of the initial period. ex: Ratio of exports to GDP(in current international prices). Average period. Ex2: square of ex. Demo: Democracy score: general openess of the political institutions civwar: Dummy variable which take value one if a civil war broke out and zero if the country did not expperienec a civil war. IRC1: religious polarization index AD: animist diversity index

Page 45: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 7A POOLED AND RANDOM EFFECTS ESTIMATION USING THE RELIGIOUS FRGAMENTATION VARIABLE , RF

Dependent variable:log difference GDP per capita, five years period from 1960 to 1989.

Model 1 Pool 2 Pool 3 Pool 4 RE 5 RE 6 RE Const 0.58

(5.65) 0.58 (5.67)

0.65 (6.88)

0.83 (6.57)

0.84 (6.60)

0.65 (6.88)

Inv 0.42 (3.06)

0.44 (3.23)

0.48 (4.32)

0.49 (3.23)

0.50 (3.30)

0.48 (4.32)

L(int.gdp) -0.52 (-3.83)

-0.05 (-3.99)

-0.06 (-5.37)

-0.08 (-4.85)

-0.08 (-4.96)

-0.06 (-5.37)

Sec 0.09 (1.53)

0.09 (1.54)

0.10 (1.88)

0.06 (1.03)

0.07 (1.04)

0.10 (1.88)

Pri 0.023 (0.40)

0.025 (0.55)

0.07 (1.68)

0.13 (0.24)

0.01 (0.26)

0.07 (1.68)

Gov -0.57 (-4.12)

-0.58 (-4.19)

-0.81 (-6.10)

-0.72 (-4.35)

-0.72 (-4.37)

-0.81 (-6.10)

Rev 0.42 (3.14)

0.41 (3.10)

0.41 (3.22)

0.42 (3.06)

0.43 (3.05)

0.41 (3.22)

Ass -0.63 (-3.24)

-0.62 (-3.21)

-0.61 (-3.32)

-0.64 (-3.14)

-0.63 (-3.14)

-0.61 (-3.32)

Coup -0.04 (-0.50)

-0.03 (-0.46)

-0.00 (-0.29)

-0.56 (-0.72)

-0.06 (-0.72)

-0.00 (-0.29)

Pish -0.035 (-1.42)

-0.03 (-1.38)

-0.01 (-0.11)

-0.05 (-1.64)

-0.05 (-1.62)

-0.01 (-0.11)

Ppdev -0.02 (-0.74)

-0.02 (-0.78)

-0.01 (-0.45)

-0.02 (-0.52)

-0.02 (-0.54)

-0.01 (-0.45)

Laam -0.06 (-2.57)

-0.06 (-2.54)

-0.07 (-3.56)

-0.07 (-2.48)

-0.07 (-2.50)

-0.07 (-3.56)

Asiae -0.005 (-0.08)

-0.00 (-0.06)

0.08 (2.19)

-0.01 (-0.19)

-0.01 (-0.18)

0.08 (2.19)

Rf -0.07 (-1.72)

-0.05 (-0.62)

-0.05 (-0.95)

-0.05 (-0.62)

Rf2 -0.09 (-1.67)

-0.08 (-1.04)

AD -0.10 (-2.20)

-0.10 (-2.20)

Lpop -0.00 (-0.60)

-0.00 (-0.60)

R2 0.3426 0.3422 0.3203 0.3318 0.3315 0.3203 N 363 363 363 363 363 363

Set of explanatory variables Barro (1991) Dummies for each religion have been used in order to isolate the effect of fragmentation. Numbers in parentheses are t-statistics. Inv: Average of the ration of real domestic investment for the period (private plus public) to real GDP. L(int.gdp): Real GDP per capita of the initial period (1985 international prices) Sec: Percentage of secondary school attained in the total population. Taken at the beginning of the period Pri: Percentage of ``Primary school attained'' in the total population. Taken at the beginning of the period. Gov: Average period of the Ratio of real government ``consumption''expenditure net of spending on defense and on education the real GDP. Rev: Number of revolutions per year, averaged over the period (Banks). Ass: number of assassassination per milion population per year, average period. Coups: number of coups per year, average period. Pish: Price level of investment (PPP I / Xrate relative to U.S.) at the begining of the period. (U.S=1.0). ppdev: Magnitude of the deviation of Pish560 from the sample mean. Laam: Dummy for Latin-American countries. Asiae: Dummy for East-Asian countries. lpop: log of the population al the begining of the period AD: animist diversity index Rf: religiuos fragmentation index used in the paper``Justice-Seeking and Loot-Seeking in Civil War''. Rf2: square of religious fragmentation

Page 46: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 7B DIRECT AND INDIRECT EFFECTS USING 3SLS ESTIMATION

Dependent variable:log difference GDP per capita, five years period from 1960 to 1989 Equations GROWTH Investment Gov.exp Civil war Const

0.61 (5.03)

-0.28 (-6.00)

0.38 (9.62)

-0.05 (-0.16)

Inv

0.45 (2.89)

Ln(Int.gdp)

-0.06 (-4.36)

0.06 (12.80)

-0.02 (-3.76)

-0.04 (-0.88)

Sec

0.08 (1.26)

0.02 (0.61)

Pri

0.07 (1.30)

Hum

-0.03 (-2.18)

Gov

-0.62 (.3.75)

-0.03 (-0.46)

Rev

0.41 (2.71)

0.13 (1.83)

-0.00 (-0.09)

Ass

-0.62 (-2.78)

-0.17 (-1.70)

-0.00 (-0.05)

Coup

-0.012 (-0.52)

-0.02 (-2.00)

0.03 (2.62)

Civwar

-0.04 (-2.36)

Pish

-0.012 (-0.48)

Ppdev

0.01 (0.26)

Ex

-0.65 (-1.45)

Ex2 1.15 (1.05)

Laam

-00.07 (-2.58)

-0.01 (-0.17)

Asiae

0.10 (1.86)

0.41 (3.09)

rf -0.05 (-1.05)

-0.02 (-1.02)

0.06 (3.84)

-0.15 (-1.20)

AD

-0.17 (-2.73)

0.05 (1.96)

-0.02 (-1.04)

0.30 (2.13)

Lpop

0.06 (0.88)

0.00 (0.35)

0.01 (-4.68)

0.04 (2.55)

Demo

0.01 (1.48)

R-squared 0.3784 0.6028 0.3583 0.2184 Dummies for each religion have been used in order to isolate the effect of polarization, Numbers in parentheses are Z-statistics. Laam: Dummy for Latin-American countries. Asiae: Dummy for East-Asian countries. gpop: average annual rate of population growth per period lpop: log of the population al the begining of the period hum: Average schooling years in the total population over age 25 of the initial period. ex: Ratio of exports to GDP(in current international prices). Average period. Ex2: square of ex. Demo: Democracy score: general openess of the political institutions civwar: Dummy variable which take value one if a civil war broke out and zero if the country did not expperienec a civil war. AD: animist diversity index Rf: religiuos fragmentation index used in the paper``Justice-Seeking and Loot-Seeking in Civil War''

Page 47: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 7C DIRECT AND INDIRECT EFFECT USING 3 SLS ESTIMATION

Dependent variable:log difference GDP per capita, five years period from 1960 to 1989 Equations GROWTH Investment Gov.exp. Civil war Const

0.69 (5.22)

-0.11 (-1.96)

0.28 (5.68)

-0.59 (-2.00)

Inv

0.36 (2.40)

Ln(Int.gdp)

-0.06 (-4.25)

0.05 (8.13)

-0.01 (-1.36)

0.03 (1.01)

Sec

0.06 (1.01)

0.01 (0.5)

Pri

0.07 (1.37)

Hum

-0.04 (-2.95)

Gov

-0.75 (-4.59)

-0.02 (-0.27)

Rev

0.56 (3.78)

0.08 (1.20)

-0.02 (-0.31)

Ass

-0.84 (-3.88)

-0.11 (-1.12)

0.02 (0.21)

Coup

0.00 (0.06)

-0.02 (-1.58)

0.02 (2.42)

Civwar

-0.07 (-2.36)

Pish

-0.03 (-1.37)

Ppdev

-0.01 (-0.24)

Ex

-1.34 (-1.86)

Ex2 2.38 (1.40)

Laam

-0.07 (-2.10)

Asiae

0.06 (1.13)

IRC1

-0.03 _(-0.55)

-0.08 (-4.44)

0.03 (2.00)

0.51 (5.11)

AD

-0.29 (-3.16)

0.05 _(1.34)

0.00 (0.1)

0.81 (4.92)

Lpop

0.00 (0.64)

0.00 (0.17)

-0.01 (-4.66)

0.01 (0.46)

Rf

-0.00 (-0.40)

0.00 (1.36)

0.00 (1.89)

-0.01 (-1.85)

Demo

-0.01 (-1.68)

R-squared 0.3963 0.6081 0.3437 0.3572 Dummies for each religion have been used in order to isolate the effect of polarization, Numbers in parentheses are Z-statistics. Inv: Average of the ration of real domestic investment for the period (private plus public) to real GDP. L(int.gdp): Real GDP per capita of the initial period (1985 international prices) Sec: Percentage of secondary school attained in the total population. Taken at the beginning of the period Pri: Percentage of ``Primary school attained'' in the total population. Taken at the beginning of the period. Gov: Average period of the Ratio of real government ``consumption''expenditure net of spending on defense and on education to real GDP. Rev: Number of revolutions per year, averaged over the period (Banks). Ass=number of assassassination per milion population per year, average period. Coups: number of coups per year, average period. Pish: Price level of investment (PPP I / Xrate relative to U.S.) at the begining of the period. (U.S=1.0). ppdev: Magnitude of the deviation of Pish560 from the sample mean. IRC1: religious polarization index. AD: animist diversity index. Rf: religiuos fragmentation index used in the paper``Justice-Seeking and Loot-Seeking in Civil War''

Page 48: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 8A DIRECT AND INDIRECT EFFECTS USING 3SLS ESTIMATION

Dependent variable:log difference GDP per capita, five years period from 1960 to 1989 Equations GROWTH Investment Gov.exp Civil war Const

0.70 (5.92)

-0.23 (-4.83)

0.34 (8.13)

-0.22 (-0.76)

Inv

0.57 (3.98)

Ln(Int.gdp)

-0.069 (-4.77)

0.06 (12.47)

-0.01 (-2.29)

-0.00 (-0.06)

Sec

0.08 (1.26)

0.01 (0.58)

Pri

0.04 (0.78)

Hum

-0.04 (-2.65)

Gov

-0.61 (-4.30)

-0.06 (-0.09)

Rev

0.35 (2.26)

0.100 (1.38)

0.02 (0.34)

Ass

-0.53 (-2.33)

-0.13 (-1.27)

-0.04 (-0.45)

Coup

-0.00 (-0.07)

-0.02 (-2.43)

0.02 0.02 (2.58)

Civwar

-0.05 (-2.26)

Pish

-0.03 (-1.33)

Ppdev

-0.01 (-0.43)

Ex

-0.58 (-1.30)

Ex2 0.32 (1.73)

Laam

-0.07 (-2.30)

0.07 (1.40)

Asiae

0.11 (2.11)

0.35 (3.01)

ELF -0.05 (-1.60)

-0.03 (-1.95)

0.03 (2.26)

0.14 (1.88)

AD

-0.15 (-2.50)

0.01 (0.46)

-0.01 (-0.26)

0.35 (2.85)

Lpop

-0.00 (-0.02)

-0.00 (-0.45)

-0.01 (-4.07)

0.02 (1.33)

Demo

0.01 (1.76)

R-squared 0.3936 0.5531 0.3148 0.2186 Dummies for each religion have been used in order to isolate the effect of polarization, Numbers in parentheses are Z-statistics. Laam: Dummy for Latin-American countries. Asiae: Dummy for East-Asian countries. gpop: average annual rate of population growth per period lpop: log of the population al the begining of the period hum: Average schooling years in the total population over age 25 of the initial period. ex: Ratio of exports to GDP(in current international prices). Average period. Ex2: square of ex. Demo: Democracy score: general openess of the political institutions civwar: Dummy variable which take value one if a civil war broke out and zero if the country did not expperienec a civil war. AD: Animist diversity index. ELF: ethnolinguistic fragmentation index

Page 49: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

TABLE 8B DIRECT AND INDIRECT EFFECT USING 3 SLS ESTIMATION

Dependent variable:log difference GDP per capita, five years period from 1960 to 1989 Equations GROWTH Investment Gov.exp. Civil war Const

0.72 (6.44)

-0.14 (-2.81)

0.28 (6.48)

-0.38 (-1.42)

Inv

0.58 (4.79)

Ln(Int.gdp)

-0.07 (-5.29)

0.05 (9.41)

-0.01 (-1.86)

0.03 (0.84)

Sec

0.07 (1.22)

0.04 (1.65)

Pri

0.006 (0.150)

Hum

-0.02 (-1.77)

Gov

-0.65 (-4.85)

0.02 (0.43)

Rev

0.18 (1.33)

0.15 (2.27)

0.036 (0.65)

Ass

-0.27 (-1.41)

-0.20 (-2.19)

-0.06 (-0.78)

Coup

-0.06 (-0.87)

-0.06 (-2.11)

Civwar

-0.07 (-3.05)

Pish

-0.03 (-1.31)

Ppdev

-0.006 (-0.23)

Ex

-0.78 (-1.76)

Ex2 1.16 (1.58)

Laam

-0.05 (-2.51)

Asiae

0.08 (2.12)

IRC1

-0.004 (-0.11)

-0.05 (-2.86)

0.04 (2.69)

0.23 (3.01)

AD

-0.25 (-2.86)

0.007 (0.181)

0.04 (1.16)

0.69 (3.67)

Lpop

0.004 (0.71)

-0.002 (-0.84)

-0.01 (-3.83)

0.02 (1.52)

ELF

-0.06 (-1.74)

-0.00 (-0.06)

0.02 (1.64)

-0.09 (-1.25)

Demo

0.007 (1.42)

R-squared 0.3883 0.4984 0.2879 0.1518 Dummies for each religion have been used in order to isolate the effect of polarization, Numbers in parentheses are Z-statistics. Inv: Average of the ration of real domestic investment for the period (private plus public) to real GDP. L(int.gdp): Real GDP per capita of the initial period (1985 international prices) Sec: Percentage of secondary school attained in the total population. Taken at the beginning of the period Pri: Percentage of ``Primary school attained'' in the total population. Taken at the beginning of the period. Gov: Average period of the Ratio of real government ``consumption''expenditure net of spending on defense and on education to real GDP. Rev: Number of revolutions per year, averaged over the period (Banks). Ass=number of assassassination per milion population per year, average period. Coups: number of coups per year, average period.

Page 50: The Effect of Ethnic and Religious Conflict on Growthmontalvo/wp/rel_ethn.pdfThe Effect of Ethnic and Religious Conflict on Growth Jose G. Montalvo* IVIE and Department of Economics

Pish: Price level of investment (PPP I / Xrate relative to U.S.) at the begining of the period. (U.S=1.0). ppdev: Magnitude of the deviation of Pish560 from the sample mean. IRC1: religious polarization index AD: Animist diversity index ELF: ethnolinguistic fragmentation index