The Effects of Human Rights on Economic Growth ...

WADE M. COLE

Department of Sociology, University of Utah, UT, Email: [email protected]

The Effects of Human Rights on Economic Growth, 1965 to 2010 ABSTRACT A long-standing research question asks whether democracy promotes or inhibits development,

but relatively few studies explore the developmental consequences of human rights. I analyze the effect of respect for bodily integrity rights and civil liberties on economic growth rates, measured as percentage changes in gross domestic product over pooled five-year intervals, for 138 countries between 1965 and 2010. Bodily integrity rights entail fundamental protections against torture, political imprisonment, extrajudicial killing, and disappearances. Civil liberties include the freedoms of speech, assembly, religion, and movement. The analyses make use of estimators designed to isolate causal directionality. I find that improvements in countries’ rated bodily integrity practices boost economic growth rates, even after accounting for other important explanatory factors and the possibility of reverse causality. Additional analyses suggest that this effect operates largely through increased domestic investment. Static levels in bodily integrity scores, conversely, have no effect on growth; neither do static levels of or dynamic changes in civil liberties.

The title of Acemoglu and colleagues’ () recent paper declares boldly and emphatically, “Democracy Does Cause Growth.” Their analysis shows that national economies grow by roughly  percent in the quarter century following democratization. Knutsen () similarly concludes, also in titular form, “Democracies Outgrow Autocracies in the Long Run.” Others find that democracy boosts economic growth rates over the long haul (Gerring et al. ; Persson and Tabellini ) as well as in the short term (Leblang ; Papaioannou and Siourounis ; Rodrik and Wacziarg ), even in the years immediately following regime change. These studies stand out for their sanguine and definitive findings. Most previous research in this domain concedes that democracy has a null, equivocal, or negative effect on economic growth (Doucouliagos and Ulubaşoğlu ; Knutsen ; Sirowy and Inkeles ). Taken together, Przeworski and Limongi’s () frank characterization of this literature more than two decades ago seems to apply with equal force today: “We do not know whether democracy fosters or hinders economic growth” (p. ). One possible reason for this state of confusion is the tendency of researchers to conflate the procedural and substantive dimensions of democracy. Growth analysts tend to view and measure democracy as either a constellation of institutions and procedures for translating popular will into public policy (i.e., democratic regimes) or a bundle of individual rights and freedoms that governments are bound to respect (i.e., democratic rights). I attempt to bring additional clarity to the relationship between democracy and development by analyzing the effects of governments’ human rights practices on economic growth. Sociology of Development, Vol. , Number , pps. –. electronic ISSN -X. ©  by the Regents of the University of California. All rights reserved. Please direct all requests for permission to photocopy or reproduce article content through the University of California Press’s Reprints and Permissions web page, www.ucpress.edu/journals. php?p=reprints. DOI: ./sod.....

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Although the minimalist regime-based and maximalist rights-based dimensions of democracy often coalesce in practice, they are not synonymous. Distinct categories of human rights relate to democracy, and possibly also to economic growth, in markedly different ways. Civil liberties and democracy represent two sides of the same coin: one side, typically defined by the presence or absence of free and fair elections, is procedural; the other side, emphasizing basic liberties such as the freedoms of expression and conscience, is substantive. Conversely, rights that protect individuals from state-sanctioned physical and psychological harms can be achieved by democracies as well as nondemocracies. Respect for these rights is strongest in countries with fully institutionalized regimes, whether democratic or autocratic, and weakest in mixed or incoherent regimes (Fein ; Regan and Henderson ). Some authoritarian regime types, moreover, show greater levels of respect for human rights than others (Davenport ). It is therefore possible that human rights bear significantly on economic development, even if the effects of democracy have proven inconclusive. Using instrumental variables estimators designed to isolate causal directionality, I analyze the effects of bodily integrity rights and civil liberties on rates of economic growth for  countries between  and . Bodily integrity rights protect individuals from egregious human rights abuses such as torture, extrajudicial killing, disappearances, and political terror. Civil liberties, for present purposes, refer to First Amendment–style guarantees: the freedoms of expression, assembly, religion, and movement. I explore the effect of static levels of and dynamic changes in countries’ rated human rights practices on economic growth, measured as percentage changes in per capita gross domestic product (GDP) over pooled five-year intervals. To preview the main findings, I conclude that civil liberties, the most widely analyzed category of rights in the growth literature, do not predict rates of economic growth; it does not matter whether these rights are measured statically or dynamically. Static bodily integrity scores also fail to predict economic growth, but dynamic improvements in these scores significantly increase rates of economic growth. Improving fundamental human rights protections is therefore good for growth. Additional analyses suggest that this effect largely operates through domestic investment: improved bodily integrity protections increase investment, which in turn promotes economic growth. These varied findings do not lend themselves to a pithy and conclusive title, but they nevertheless deepen our understanding of the convoluted relationship between democracy and development. THREE PERSPECTIVES ON HUMAN RIGHTS AND GROWTH

Three main perspectives characterize research on democracy and economic growth: the conflict or trade-off thesis, the compatibility or “win-win” perspective, and the skeptical or “no-effect” camp (Helliwell ; Kurzman, Werum, and Burkhart ; Sirowy and Inkeles ). I use these perspectives as a point of departure for considering the effects of human rights on growth. Perspective 1: Human Rights Inhibit Growth

According to the conflict or trade-off perspective, human rights violations “are necessary, and thus justifiable or even desirable, to achieve rapid economic development. . . . The sacrifice 376

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of civil and political rights to economic development has been a mainstay of dictatorships of various stripes in all regions” (Donnelly :). Democracy is thought to impede economic growth by giving expression to popular but myopic demands for increased consumption, redistribution, and even expropriation, as opposed to a far-sighted but presumably unpopular orientation toward savings and investment. Developmentalist dictators, being more insulated from populist whims, can implement difficult and sometimes painful policies that foster economic growth and benefit society in the long run. The trade-off perspective also emphasizes the paramount importance of stability and predictability for economic development. What matters most for economic growth, to paraphrase Huntington (:), is not the form of a country’s government but rather its effectiveness: economies grow more readily under orderly oligarchies than in disorderly democracies. Strong authoritarian leaders provide the social order and stability required for growth by, among other things, dampening conflicts among tribal, ethnic, or religious groups (Chua ; Huntington ; Huntington and Nelson ; Kaplan ; Zakaria ). For example, when “ethnic hatred . . . was held in check by the charisma and iron hand of Josip Broz Tito” (Chua :), Yugoslavia recorded one of the highest growth rates in the world, on par with Singapore’s.1 In contrast, basic civil liberties and political rights—among them the freedoms of speech, assembly, and the press—can be used to incite social discord and conflict, serving to destabilize societies and obstruct growth. Much anecdotal evidence seems to support this perspective. Przeworski and colleagues () note that “the most rapidly growing country in the world in the s . . . was communist Romania. The economic miracle of the early s was the military-ruled Brazil. The economic tigers of the s were the dictatorships of Singapore, South Korea, and Taiwan. In the s the leader was China” (p. ). Krieckhaus () similarly points out that the spectacular economic successes of Korea, Taiwan, and Japan occurred under the auspices of a military-backed regime, an authoritarian corporatist state, and a de facto oneparty system. Kaplan () pushes the argument even further: “Democratic Russia . . . remains violent, unstable, and miserably poor despite its  percent literacy rate. Under its authoritarian system China has dramatically improved the quality of life for hundreds of millions of its people. My point, hard as it may be for Americans to accept, is that Russia may be failing in part because it is a democracy and China may be succeeding in part because it is not” (p. ). Kaplan goes on to suggest that countries might legitimately sacrifice civil and political rights at the altar of economic development, this time adducing Singapore for support. Before the austere and heavy-handed autocrat Lee Kuan Yew arrived on the scene, Singapore was “a mosquito-ridden bog filled with slum quarters that frequently lacked both plumbing and electricity.” Kaplan’s () not-so-rhetorical question follows: “Doesn’t liberation from filth and privation count as a human right?” (p. ). To summarize, the conflict or trade-off thesis holds that authoritarian governments provide the order, stability, and autonomy necessary for economic growth. By comparison, democracy in general—and civil and political rights in particular—provides the breeding grounds for gridlock, “capture” by special interests, and, in some cases, intercommunal violence, all of which are detrimental to growth. Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

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Few scholars, even those who argue that civil liberties restrictions promote growth, imagine a scenario in which physical repression leads to economic expansion. Historical examples can nevertheless be found. Moore () showed how labor-repressive regimes in Germany and Japan “put the screw on the peasants” (p. ) to extract surpluses and coerce economic growth. In more recent times autocrats resorted to repression to implement liberalizing economic reforms. Pinochet, for example, ruthlessly executed , Chileans and tortured , more, all so his Chicago Boys could force the economy open and pave the way for remarkable growth (McCarthy ). Perspective 2: Human Rights Promote Growth

A variety of perspectives challenge the view that democracy and human rights are incompatible with economic growth. Although dramatic bursts of short-term economic growth sometimes occur under authoritarian regimes, growth tends to be volatile and ephemeral. Durable growth requires democracy and basic human rights (Acemoglu and Robinson ; Kurzman et al. ; Sirowy and Inkeles ). In their book Why Nations Fail, Acemoglu and Robinson () argue that democracy and basic human rights give rise to economic opportunities that nurture long-term development. In contrast to Kaplan, they suggest that “countries such as Great Britain and the United States became rich because their citizens overthrew the elites who controlled power and created a society where political rights were much more broadly distributed, where the government was accountable and responsive to citizens, and where the great mass of people could take advantage of economic opportunities” (pp. –). Sustained prosperity as opposed to meteoric but momentary growth requires effective political and economic institutions, and these institutions are built on a foundation of basic human rights: the physical inviolability of individuals, due process rights, civil freedoms, and the right to participate in collective governance.2 Respect for human rights is thought to promote growth via several mechanisms. Although rights can be costly to implement and protect, Farber () suggests that these costs paradoxically nurture economic growth. Some costs are indirect. Regimes may simply find it more expeditious to coerce policy changes than to solicit popular support (Tilly ). Other costs are direct. Free and fair elections, for example, are logistically complex and require a great deal of infrastructural, technological, and financial resources to carry out (López-Pintor ). Likewise, due process rights depend on effective judicial systems, access to legal representation (often at state expense), and so on. Even the obligation to abstain from violating bodily integrity, although often interpreted as an archetypically negative (and hence costless) right that mandates government inaction, actually presupposes an effective (and costly) bureaucratic apparatus for monitoring, training, and constraining state agents (Cole ; Donnelly ). According to Farber (), these costs promote growth by signaling to investors, business owners, consumers, and other economic agents that a regime will also respect their prerogatives. Civil rights guarantees such as due process and speech freedoms circumscribe government action and make “direct or indirect expropriation harder to accomplish” (Farber :). Similarly, respect for bodily integrity demonstrates a government’s commitment to “constrain[] itself from abusing its monopoly of power and engaging in predatory behavior” 378


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(Benyishay and Betancourt :). Governments bear these costs in the short term in exchange for greater economic returns in the long term. Aside from their hypothesized signaling function, Knutsen () argues that civil liberties promote economic growth in more tangible ways. The freedoms of speech, association, movement, and the press encourage the open exchange of ideas and information, which in turn fosters creativity and innovation—important drivers of economic growth. Autocratic regimes that restrict civil rights in their attempt to stifle dissent inadvertently close off these avenues for economic development. More fundamentally, respect for human rights creates a stable, predictable, and secure environment conducive to economic growth. As with the trade-off perspective, this view acknowledges that growth depends on order and stability, but it contends that these outcomes are best achieved by respecting rather than repressing human rights. Economic development is simply unlikely when governments act arbitrarily and capriciously. Governments that summarily imprison, torture, or kill citizens might also expropriate their wealth or confiscate their property (Acemoglu and Robinson :). Abouharb and Cingranelli () similarly surmise that “widespread fear, stress, and dissatisfaction among the citizenry . . . negatively affect societal economic performance” (p. ). Governments that protect basic human rights “generate the security of expectation necessary to motivate citizens to work, save, and invest” (Sirowy and Inkeles :–). In this vein, some observers note that strong labor rights attract rather than repel foreign investment, despite increased production costs, for two reasons: first, labor rights tend to mitigate social unrest and prevent work stoppages; and second, investors infer from these protections that the rule of law is strong and their own rights will be respected (Mosley ; Mosley and Uno ; Rudra ). High or expanding levels of respect for human rights may likewise assure risk-averse domestic investors that their societies are stable, their lives and livelihoods secure, and their investments safe. Perspective 3: Human Rights Have No Effect on Growth

Scholars in a third and final skeptical or no-effect camp doubt that there is any causal linkage between regime type and economic growth. Many studies have found little or no direct effect of either democracy or authoritarianism on growth (Baum and Lake ; Glaeser et al. ; Helliwell ; Krieckhaus ; Kurzman et al. ; Przeworski et al. ; Sirowy and Inkeles ).3 Although supporters and detractors of the conflict perspective have no shortage of anecdotes to buttress their respective positions, systematic empirical evidence often fails to support either one. But what about democracy’s substantive dimensions? To the extent that research has examined the nexus between rights and growth, civil freedoms and political rights have received the bulk of the attention. Early studies found that growth rates were higher in countries with the best civil rights practices (Kormendi and Meguire ) and lower in the most repressive countries (Grier and Tullock ), but these effects were modest and statistically unreliable. Later analyses documented a salutary but extremely fragile civil rights effect, with results that proved sensitive to different estimators and specifications (Fedderke and Klitgaard ) or that were ambiguous with respect to the magnitude, significance, or stability of the effect Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

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(Dawson ). A more recent study (Blume and Voigt ) reports a small positive effect of civil rights on growth but no discernable effect of bodily integrity rights protections. In sum, a scant empirical literature generally finds weakly positive but extremely fragile effects of human rights on growth. LIMITATIONS OF PAST RESEARCH

Unfortunately, empirical research linking rights to growth is not only scant; it is also flawed in several respects. It is important to take stock of these limitations before proceeding with my own analysis of the trade-off, compatibility, and no-effect perspectives. Much prior work analyzes the effect of democracy on economic growth, but the results of these efforts remain inconclusive. Far fewer studies consider the developmental consequences of human rights, and none has yet examined the net effects of democracy’s procedural and substantive aspects. The widely used Polity regime score, which summarizes the openness and competitiveness of elections as well as the extent of institutional checks on executive authority (Marshall, Gurr, and Jaggers ), is one of the most common measures of procedural democracy in the growth literature. Others take a more minimalist approach, coding binary indicators that tap the most basic elements of democracy—usually, the presence of competitive multiparty elections (Alvarez et al. ; Boix, Miller, and Rosato ; Cheibub, Gandhi, and Vreeland ). These measures and indicators overlook the rights-based aspects of liberal democracy. Other popular democracy measures include the civil and political rights indices produced by Freedom House (Puddington et al. ). These indices gauge the extent to which governments respect substantive rights and freedoms, including the right to vote and the freedoms of expression, association, and belief. But a thorough review of several democracy measures concluded that the Freedom House scores are “so problematic as to require explicit mention” (Munck and Verkuilen :). First, the methodology for deriving the scores lacks transparency. We do know, however, that coding rules and procedures changed over time: prior to , a single coder produced the ratings; after , a team of coders assigned scores based on a revised checklist. These changes cast doubt on the internal consistency of the indices. The Freedom House scores also conflate distinct categories of rights. The civil liberties index includes protection from torture and political terror alongside core rights and freedoms relating to speech, assembly, religion, and due process. These categories of rights are best kept distinct: as I show, they ultimately have variable effects on economic growth. The civil liberties index also incorporates respect for property rights and penalizes countries with state-owned enterprises. Recent analyses find that these sorts of economic freedoms predict higher rates of growth, whereas other categories of rights do not (Benyishay and Betancourt ; Blume and Voigt ).4 Consistent with this promarket slant, several analysts allege that Freedom House ratings favored US allies to the detriment of leftist regimes and countries with strong welfare states, especially during the Cold War (Bollen ; Bollen and Paxton ; Steiner ). In addition to measurement issues, research analyzing the effect of rights on economic growth too often fails to account for causal simultaneity. Given the core thrust 380


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of modernization theory—that democracy and respect for human rights follow from, rather than precede, economic development—it is absolutely imperative to determine as best we can causal directionality. Blume and Voigt’s () analysis attempts to do so through the use of instrumental variables, but their instruments—lagged values of the endogenous regressor—are biased in the presence of autocorrelation (Murray ). They also failed to report diagnostics for assessing the validity of their instruments. Knutsen () remedies most but not all of these shortcomings. Although he analyzes the effect of democracy on economic growth using the problematic Freedom House civil liberties index, he validates these findings with an alternative measure of civil and political rights. He also conscientiously accounts for endogeneity bias by estimating structural equation models with instrumental variables. He does not, however, attempt to distinguish the net effects of procedural and substantive democracy; instead, he treats procedural democracy (measured using the Polity score) and civil liberties (measured by Freedom House) as substitutes, analyzing their effects on growth separately rather than in tandem. Nor does he analyze the effects of basic bodily integrity rights protections on subsequent economic growth. In the analyses that follow, I seek to improve upon these limitations. First, I make use of new and improved measures of countries’ civil liberties and bodily integrity rights practices. These measures are available for a large sample of countries over a relatively long observation period. Second, I use two-stage models and instruments with demonstrated validity to account for reciprocal causation between human rights and economic growth. Finally, I examine the effects of different categories of human rights while holding an important element of procedural democracy—the presence of competitive multiparty elections—constant. DATA AND METHOD

Dependent Variable: Economic Growth

I analyze rates of economic growth in five-year intervals between  or  and , expressed as percentage changes in per capita GDP rendered in constant  US dollars (World Bank ). I measure growth in half-decadal rather than annual intervals because “as time periods shrink . . . economic growth becomes more difficult to model” due to “tremendous amounts of ‘noise’ in annual economic growth rates” (Kurzman et al. :, ). The pooled sample includes  countries (Appendix A lists them); the observation period, and hence the total number of country-year observations, depend on the availability of data on the core independent variables—human rights scores. Independent Variables: Human Rights Scores Bodily Integrity Score Most existing research on bodily integrity rights practices relies

on one of two ordinal variables: the five-point Political Terror Scale (PTS; Wood and Gibney ) or the nine-point Physical Integrity Rights Index from the CingranelliRichards Human Rights Database (CIRI; Cingranelli and Richards ). Both variables are coded from annual reports issued by Amnesty International and the US Department of State. The measures gauge levels of torture, political murder or extrajudicial killing, disappearances, and political imprisonment perpetrated or authorized by governments officials and their agents. Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

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Although widely analyzed, these measures have been criticized on methodological grounds. Clark and Sikkink () point out that Amnesty International, the State Department, and other human rights observers catalogued new forms of abuse, redefined existing abuses more expansively, and intensified monitoring efforts over time. These processes can give the false appearance that human rights violations increased, at least in the short term (Cole and Ramirez ). To address these biases, Fariss () developed a measure of bodily integrity practices that accounts for the “changing standard of accountability” (p. ). Using item response theory, he synthesized the CIRI and PTS measures along with several cognate variables of torture and repression. The resulting latent measure corrects for biases arising from information effects. An added benefit of Fariss’s measure is its relatively long temporal coverage. Data on rated bodily integrity practices in my sample are available from  onward, producing a total of  country-year observations pooled over nine half-decadal intervals. Civil Liberties Score I operationalize civil liberties using the Civil Liberty Dataset (CLD; Møller and Skaaning ), an ordinal index with subcomponents that tap government respect for the freedoms of expression, association, religion, and movement. Each subcomponent indicates whether the associated right is severely restricted (), fairly restricted (), modestly restricted (), or unrestricted () in a given country-year, resulting in a cumulative index that ranges from  to .5 The CLD index improves upon comparable measures such as the CIRI Empowerment Rights Index in several ways.6 First, the CIRI index rates political as well as civil rights: in addition to the civil liberties covered by the CLD, it includes the right to participate in free and fair elections. For the purposes of this study, which emphasizes the substantive or rightsbased dimensions of democracy, suffrage rights are perhaps too closely identified with procedural or regime-based aspect of democracy.7 Moreover, the CIRI index does not become available until , whereas coverage for the CLD civil liberties score begins in , resulting in a sample of  country-year observations over seven five-year intervals.8 Much as researchers have analyzed how static levels of democracy and short-term processes of democratization affect economic growth, I estimate the effects of levels of and changes in human rights scores. Levels are measured at the beginning of the corresponding growth interval (e.g.,  for the growth rate between  and ). Change scores are measured coterminously with five-year growth intervals. Within the study sample, static bodily integrity scores range from –. to ., with a mean of . (standard deviation = .). The mean five-year change in bodily integrity scores is . (standard deviation = .), with a range of –. to .. Static civil liberties scores vary between the lowest () and highest () possible scores, with a mean of . (standard deviation = .). Five-year civil liberties change scores range from – to , with a mean of –. (standard deviation = .).

Estimators

When modeling the effect of human rights on economic growth, one must account for the possibility of reverse causality (also known as endogeneity or simultaneity). Modernization 382


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theory states that countries are more likely to become democratic—and hence to respect a range of human rights—as they develop economically. To be sure, many studies conclude that economic development is a necessary (if not sufficient) precursor to democratization (Barro , ; Boix and Stokes ; Bollen and Jackman ; Burkhart and Lewis-Beck ; Cutright ; Glaeser et al. ; Helliwell ; Lipset ; Sirowy and Inkeles ). Others suggest that economic development can be disruptive for society, leading to greater levels of instability, violence, and repression (Huntington ; Olson ). Failing to account for these relationships could bias the estimated effects of human rights on growth. Indeed, those who take endogeneity seriously in their analyses typically conclude that development “causes” democracy rather than vice versa. Helliwell () showed that aggregate national income positively affects democracy—in line with modernization theory—but that democracy has no systematic effect on subsequent growth. Burkhart and Lewis-Beck () found that economic development “Granger causes” democracy but that democracy does not “Granger cause” development.9 Barro (, ) concurs: the effect of democracy on growth has been, if anything, weakly negative, whereas the effect of economic development on democracy is positive and strong. “Political freedom,” he concludes, “emerges as a sort of luxury good” because only “rich countries can afford the reduced rate of economic progress” that follows democratization (Barro :). These and related findings prompted Inglehart and Welzel () to assert that “causality runs mainly from economic development to democratization” (p. ). Human rights analyses are not immune from these concerns. Nearly every statistical analysis of human rights practices finds that levels of respect are greatest in affluent countries. Other research, building on Olson’s () theory that rapid growth can destabilize societies, suggests that too much growth over too short an interval is detrimental to rights protections (Poe and Tate ). To isolate this causal effect of human rights on growth, I therefore estimate two-stage regression models with instrumental variables by limited information maximum likelihood, or IV-LIML for short (Schaffer ). Compared with conventional two-stage least-squares estimators, IV-LIML is less biased and more efficient, and it performs better in the presence of weak instruments (Angrist and Pischke ; Hahn, Hauman, and Kuersteiner ; Stock and Yogo ). I then compare these results with those obtained from ordinary least-squares (OLS) estimators. In all cases, I report robust standard errors adjusted for homoscedasticity and clustering within countries. Excluded Instruments

Estimates from IV-LIML are only as good as the variables selected to instrument the endogenous variable of interest. Valid instruments must satisfy two criteria. First, they must be sufficiently correlated with the endogenous variable (here, human rights scores): the stronger the correlation, the better the instrument. Second, they must be uncorrelated with the error term of the structural equation (here, the equation modeling economic growth rates). The first condition, known as instrument relevance, can be directly observed; the second condition, instrument exogeneity, must be inferred because the error term is unobserved. For all Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

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IV-LIML analyses, I report a battery of diagnostic tests for assessing instrument relevance and exogeneity. Appendix B provides additional regression-based tests. Bodily Integrity: Levels Instruments for lagged bodily integrity scores (t–) include lagged measures of judicial independence (Linzer and Staton ), the relative size of the youth population (World Bank ), and voter participation rates (Vanhanen ). Linzer and Staton () use item response theory to combine eight measures of judicial autonomy and influence into a single score. Youth population size is defined as the percentage of a country’s population aged  to . The voter participation rate gives the percentage of the total population that cast a ballot in the previous election, with countries that do not hold elections scored . Independent courts serve as an important bulwark against arbitrary state repression (Keith ; Powell and Staton ). Powell and Staton () find “strong evidence that effective judicial systems seem to protect individuals against torture” (p. ), a particularly egregious abuse of bodily integrity. Keith () also concludes that “the achieved level of judicial independence in a state does in fact reduce the likelihood of repression of personal integrity rights and civil liberties restrictions” (p. ). In fact, she finds that the effect of judicial independence on state repression outweighs even that of democracy. Judicial independence is therefore a promising instrument for bodily integrity scores.10 Voter participation rates also correlate positively with bodily integrity scores. High voter turnout implies that citizens feel secure enough to cast ballots without fear of repression or retribution. In contrast, illiberal regimes often resort to bodily integrity violations—political imprisonment, intimidation, and the like—to suppress voter turnout (Hafner-Burton, Hyde, and Jablonski ). Unlike judicial independence and voter participation, large youth cohorts are robustly associated with increased political violence and repression (Goldstone ; Urdal ; Nordås and Davenport ). Young people are the most likely to engage in rebellious behavior, and rebellion—or even the tacit threat of rebellion—often provokes state repression. Consequently, “When faced with a large group of youth between the ages of  and , governments are more likely to engage in repressive action” ranging from rights restrictions to arrests and disappearances (Nordås and Davenport :).11 Bodily Integrity: Changes I instrument dynamic changes (as opposed to static levels) in bodily integrity scores using five-year changes in judicial independence scores and voter participation rates, as previously defined; five-year changes in Banks and Wilson’s () index of domestic conflict; and five-year changes in a focal country’s regional bodily integrity score. The domestic conflict index sums the weighted number of eight distinct conflict episodes or events, drawn chiefly from media reports: assassinations, general strikes, guerrilla warfare, major government crises, purges, riots, revolutions, and antigovernment demonstrations (Wilson ). I log this index to reduce extreme skew, after adding  to all observations to account for country-years with a score of zero. My use of changes in regional bodily integrity scores reflects recent work that instruments democracy using neighbors’ level of or transitions to democracy (Acemoglu et al. ; Persson and Tabellini ). This score is based on six 384


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regions: the Americas, Asia-Pacific, Eastern Europe, Middle East/North Africa, Sub-Saharan Africa, and Western Europe. Civil Liberties: Levels Instruments for lagged civil liberties scores (t–) include the average

civil liberties score in a focal country’s region and the aforementioned measure of judicial independence. As noted previously, independent judiciaries safeguard civil liberties as well as bodily integrity rights (Keith ), and regional civil rights scores are again based on comparable instruments used in studies linking democracy to growth. Civil Liberties: Changes The single best instrument for changes in civil liberties scores is

changes in judicial independence scores over the same period. I tested other potential instruments, all of which were generally weak. Nevertheless, in order to conduct appropriate exogeneity tests (see below), models must be overidentified: that is, the number of instruments must exceed the number of endogenous regressors. Therefore, in addition to estimating exactly identified models (i.e., with only one instrument), I estimate an overidentified model that includes the average civil liberties score in a focal country’s region, lagged by five years, as an instrument. Control Variables

The analyses include a battery of standard control variables that, except where noted, come from the World Development Indicators database (World Bank ). Most of these variables are measured at the beginning of the corresponding five-year growth interval. Three variables—initial GDP per capita, investment, and trade—represent the strongest and most robust predictors of growth in past research (Levine and Renelt ). Initial GDP per capita, expressed in constant  US dollars (logged), accounts for convergence: economies tend to grow at a faster rate in poorer than richer countries (Barro ). A measure of investment gives the ratio of gross domestic capital formation to GDP. Trade is also measured as a percentage of GDP. Secondary education ratios, expressed as the secondary completion rate among adults over age , measure the contributions of human capital to growth (Barro and Lee ). Government expenditure as a percentage of GDP is often hypothesized to “reduce economic growth by shifting resources from the private sector to the public sector” (Krieckhaus :). Inflation, defined as the rate of price change in the entire economy, is measured as yearly rates averaged over the preceding five-year interval. The rate of population growth is also measured over the preceding five-year interval. An indicator of procedural democracy is the final control variable of interest. A binary variable denotes countries for which the executive is directly or indirectly responsible to the electorate; the legislature is chosen in free and fair elections; and a majority of adult men have the right to vote (Boix et al. ).12 This minimalist approach allows us to compare the effects of substantive human rights protections and procedural accountability mechanisms on growth. Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

385

RESULTS

Human Rights Levels and Economic Growth

The first two models in table  present estimates for the effect of lagged bodily integrity scores on five-year economic growth rates, net of control variables: model  is estimated by IV-LIML, and model  by OLS. Models  and  repeat these analyses for lagged civil liberties scores.

TABLE 1.

Net Effect of Rated Human Rights Practices on Five-year Growth Rates in per Capita GDP Bodily Integrity Analyses

Bodily integrity score (t−5)

Civil Liberties Analyses

Model 1:

Model 2:

Model 3:

Model 4:

IV-LIML

OLS

IV-LIML

OLS

−1.595

−.245

(1.468)

(.531) .405

−.558

(.658)

(.399)

Civil liberties score (t−5)

GDP/capita, logged (t−5)

−.868

−1.335*

−2.374**

−1.841**

(.755)

(.635)

(.740)

(.595)

.036*

.027+

.040*

(.016)

(.014)

(.016)

(.013)

.278*

.247*

(.142)

(.124)

Trade, % GDP (t−5)

Investment, % GDP (t−5)

.325**

.340**

(.121)

(.123)

Secondary education ratio (t−5)

.144+ (.076)

(.076)

(.085)

(.080)

Gov’t expenditure, % GDP (t−5)

−.310**

−.338**

−.353**

−.361***

(.109)

(.112)

(.117)

(.107)

Inflation rate (five-year average)

−.007***

−.007***

−.006***

−.007***

(.001)

(.000)

(.001)

(.001)

Population growth, % (t, t−5)

−.365**

−.358**

−.385**

−.410**

(.124)

(.122)

(.140)

(.136)

Democracy = 1 (t−5)

2.397

1.549

1.122

4.383*

(2.054)

(1.751)

(2.904)

(1.855)

13.651*

18.195***

19.803**

26.695***

(6.627)

(4.973)

(6.662)

(5.733)

51.13

25.40

43.52

Constant

.136+

.043***

.239**

.213**

F

104.40

df

9

9

9

9

N (country-year observations)

905

905

740

740

N (countries)

138

138

138

138

Observation period

1965–2010

Underidentification testa

386


1965–2010

30.47***

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1975–2010 25.78***

1975–2010

TABLE 1.

Net Effect of Rated Human Rights Practices on Five-year Growth Rates in per Capita GDP (continued ) Bodily Integrity Analyses

Weak identification testb

Model 1:

Model 2:

Model 3:

Model 4:

IV-LIML

OLS

IV-LIML

OLS

54.28 c


104.86

Overidentification test (p value)

1.12 (.57)

.08 (.77)

Orthogonality test (p value)d

2.23 (.53)

.44 (.80)

e

Endogeneity test (p value)

.72 (.40)

1.88 (.17)

+p < .10, *p < .05, **p < .01, ***p < .001 (two-tailed). IV-LIML = limited-information maximum-likelihood estimator with instrumental variables; OLS = ordinary least-squares estimator. Robust standard errors adjusted for homoskedasticity and clustering within countries in parentheses. External instruments:

•

Bodily integrity score: judicial independence score, t−5; population aged 15 to 24 (%), t–5; voter participation rate, t−5.

•

Civil liberties score: judicial independence score, t−5; regional civil liberties score, t−5.

a. Kleibergen-Paap rk LM test of underidentification—H0: excluded instruments are not correlated with the endogenous regressor. b. Cragg-Donald Wald F test of weak identification—H0: equation is weakly identified, i.e., the instruments are only weakly correlated with the endogenous regressor. Evaluated against Stock and Yogo (2005) critical value, 10 percent maximal IV size: 6.46 for model 1; 8.68 for model 3. c. Hansen’s J test of overidentification—H0: instruments are uncorrelated with the error term in the structural equation and are correctly excluded. d. Anderson-Rubin weak-instrument-robust inference Wald test of orthogonality conditions—H0: orthogonality conditions are met, i.e., the instruments are not significantly correlated with the dependent variable in the structural equation (i.e., economic growth). e. Endogeneity test—H0: the suspected endogenous regressor can be treated as exogenous, indicating that the model estimated by OLS is preferred.

Before considering the substantive findings, I first inspect diagnostic tests designed to evaluate the relevancy, strength, and exogeneity of instruments used in the IV-LIML models. I conduct four such tests, two of which consider instrument relevance. The underidentification test evaluates the null hypothesis of zero correlation between a set of excluded instruments and an endogenous variable; rejection indicates that the instruments are relevant. The weak identification test then gauges whether this correlation, even if nonzero, is weak; rejection suggests that the instruments are strong.13 In both IV-LIML models, each test safely rejects the null hypothesis, indicating that the instruments are relevant and strongly correlated with their respective human rights measures. Two additional diagnostics infer whether the instruments are also exogenous. The overidentification test assesses whether the instruments are uncorrelated with the error term in the structural equation and hence correctly excluded from it; failure to reject the null hypothesis suggests that the instruments are properly exogenous. An associated test of the orthogonality assumption is robust to the presence of weak instruments. In each model both Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

387

tests fail to reject the null hypothesis, inspiring confidence that the instruments are exogenous as well as relevant. (Appendix B reports and discusses additional tests, all of which point to similar conclusions.) The final row of table  reports a Hausman-like endogeneity test. Under the null hypothesis, endogeneity bias is not present and the suspected endogenous regressor (here, human rights scores) can be treated as exogenous. Failure to reject the null hypothesis means that the corresponding OLS estimates, which are more efficient and less biased than those obtained using instrumental variables, are preferred. These tests indicate that both bodily integrity and civil liberties scores are exogenous to economic growth (p = . and ., respectively), thus favoring the OLS estimates.14 On the basis of this extensive set of diagnostic tests, we can now confidently conclude that neither bodily integrity nor civil liberties scores reliably predict five-year growth rates in per capita GDP. The preferred OLS coefficient on the lagged bodily integrity score is negative (β = –.) but falls well short of statistical significance ( p = .). The corresponding estimate on the lagged civil liberties score is also negative but statistically insignificant (β = –., p = .). In contrast with these null findings, estimated coefficients on most control variables reached at least marginal levels of statistical significance. Initial GDP per capita, government expenditure, inflation, and population growth all depress rates of economic growth, whereas trade, investment, and education accelerate growth. The binary indicator for procedural democracy is significantly positive in the preferred civil liberties analysis (model ) but not the corresponding bodily integrity analysis (model ). This finding may imply that electoral accountability matters more for growth than civil liberties, but the evidence is far from definitive: the analysis adjusts for the endogeneity of civil rights but not procedural democracy. Human Rights Changes and Economic Growth

Table  presents corollary estimates for the effect of changes in human rights scores on economic growth rates. Models  and  analyze changes in rated bodily integrity practices by IV-LIML and OLS, respectively. Although lagged levels of bodily integrity scores did not systematically affect economic growth, positive changes in these scores significantly predict increased growth rates. In other words, countries with bodily integrity scores that improve over time grow faster than countries with stable or declining practices. Diagnostic tests in model  indicate that the instruments for bodily integrity change scores are both relevant and exogenous. The endogeneity test prefers the OLS estimate (model : β = ., p < .), which is smaller but more reliable than the corresponding IV-LIML estimate (model : β = ., p = .). Figure  plots these estimated effects and their  percent confidence intervals, with control variables set to their mean values. On the basis of the OLS estimates in model , an otherwise “average” country with a bodily integrity change score in the first percentile—equivalent to a decline of . points over a five-year period—is expected to grow by roughly . percent. When evaluated at the median (i.e., when bodily integrity scores improve by . points over five years), the expected growth rate increases to . percent. At the th percentile of bodily integrity change scores (+. points), economies grow at an estimated . percent 388


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Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

389







Civil liberties change score (t, t−5)

.126 (.077) −.344** (.112) −.007*** (.000)

.119 (.077) −.346** (.111) −.007*** (.000)

.351** (.123)

.358** (.123)

.024+ (.014)

.023+

(.552)

(.548)

(.013)

−1.469**

−1.478**

2.665** (1.028)

5.373+

OLS

Model 6:

(3.352)

IV-LIML

Model 5:

Bodily Integrity Analyses

(.001)

−.007***

(.111)

−.353**

(.081)

.229**

(.142)

.254+

(.015)

.043**

(.583)

−2.145***

(.001)

−.007***

(.111)

−.353**

(.081)

.229**

(.142)

.253+

(.015)

.043**

(.581)

−2.143***

1.314 (1.559)

1.224 (1.575)

IV-LIML

b

a

IV-LIML

Model 8:

Model 7:


Net Effect of Changes in Rated Human Rights Practices on Five-year Growth Rates in per Capita GDP

Bodily integrity change score (t, t−5)

TABLE 2.

(continued )

(.001)

−.006***

(.113)

−.355**

(.079)

.227**

(.134)

.270*

(.015)

.041**

(.568)

−2.185***

(.421)

−.412

OLS

Model 9:

390


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37.36***

Underidentification test

Weak identification test


2.58 (.46)

24.47

1965–2010

Observation period

c

138

N (countries)

9 905

df


85.59

1965–2010

138

905

9

91.29

19.021*** (4.433)

19.035*** (4.418)

.344 (.384)

(.120)

(.117) .336

−.355**

−.358**

(.383)

OLS

IV-LIML

F

Constant

Five-year democracy score

Model 6:

Model 5:


.04 (.83)

37.63

20.62***

1975–2010

138

740

9

62.02

(4.967)

22.224***

(.413)

.595

(.139)

−.375**

—

67.82

18.12***

1975–2010

138

740

9

63.35

(4.948)

22.199***

(.410)

.598

(.139)

−.373**

IV-LIML

b

a

IV-LIML

Model 8:

Model 7:


1975–2010

138

740

9

26.56

(4.921)

22.689***

(.390)

.544

(.138)

−.398**

OLS

Model 9:

Net Effect of Changes in Rated Human Rights Practices on Five-year Growth Rates in per Capita GDP (continued )


TABLE 2.


391

1.32 (.25)

.73 (.69)

1.37 (.24)

.72 (.40)

Model 8: IV-LIMLb

Model 7: IV-LIMLa


OLS

Model 9:

Civil liberties score, model 7: five-year change in judicial independence score; regional civil liberties score, t–5.

Civil liberties score, model 8: five-year change in judicial independence score.

•

•

model 5: 5.44,

model 7: 8.68, and

model 8: 16.38.

•

•

•

Instrumental variables diagnostic tests are as described at the base of table 1. a. Overidentified model. b. Exactly identified model. c. Stock and Yogo (2005) critical value for evaluating Cragg-Donald Wald F weak identification test, 10 percent maximal IV size:

Bodily integrity score: five-year change in judicial independence score; five-year change in voter participation rate; five-year change in (logged) domestic conflict index; five-year change in regional bodily integrity score.

•

+p < .10, *p < .05, **p < .01, ***p < .001 (two-tailed). IV-LIML = limited-information maximum-likelihood estimator with instrumental variables; OLS = ordinary least-squares estimator. Robust standard errors adjusted for homoskedasticity and clustering within countries in parentheses. External instruments:

.39 (.53)


OLS

IV-LIML 4.43 (.35)

Model 6:

Model 5:


Net Effect of Changes in Rated Human Rights Practices on Five-year Growth Rates in per Capita GDP (continued )

Orthogonality test (p value)

TABLE 2.

30

5-year economic growth rate (%)

25 20 15 10 5 0 −5 −10

1%

10%

25% 50% 75% Bodily integrity change score percentiles IV-LIML (Model 5)

FIGURE 1.

90%

99%

OLS (Model 6)

Estimated net effect of changes in bodily integrity scores on five-year growth rates

(Thin lines represent  percent confidence intervals. Estimates are based on models  and  in table , with control variables set to their mean values.)

over five years. The trend based on the IV-LIML estimate in model  is steeper but less precise. Just how influential are changes in bodily integrity scores on economic growth, relative to other predictors? To address this question, table  presents the estimated change in five-year growth rates when bodily integrity change scores and other statistically significant control variables are allowed to vary across their interquartile ranges, with all other variables set to their respective means. Investment as a share of GDP has the largest positive effect: on average, economies grow by . percent over a half decade at the th percentile of investment, but they grow by . percent at the th percentile—an increase of  percent over the interquartile range. Bodily integrity rights change scores command the next-largest positive effect, with growth rates increasing by nearly  percent over that variable’s interquartile range. Trade as a share of GDP also increases growth, albeit at a somewhat lower rate. All other effects are negative: inflation has a mildly negative effect on economic growth, whereas government expenditures, population growth, and initial GDP per capita substantially depress growth rates. Returning to table , the final three models show that changes in civil liberties scores are not reliably associated with five-year economic growth rates. Diagnostic tests favor the OLS estimate (model ) over both the overidentified and exactly identified IV-LIML estimates (models  and ); in the preferred model, the estimated effect of changes in civil liberties scores is negative but statistically insignificant. The effects of most control variables, however, remain robust: initial GDP per capita, government expenditures, inflation rates, and population growth retard economic growth rates; trade, investment, and education generally increase growth. The coefficient on procedural democracy, measured here as the sum of a country’s binary democracy score over the corresponding five-year growth interval, is 392


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TABLE 3. Estimated Change in Five-year Economic Growth Rates across the Interquartile Range of Bodily Integrity Change Scores and Control Variables

25th Percentile

75th Percentile

9.4

12.3

31.0%


10.2

11.6

14.7%


10.3

11.5

11.7%

Inflation rate, 5-year average (t−5)

11.2

11.1

−0.6%


12.4

9.7

−21.4%


12.9

9.5

−26.3%


12.8

8.7

−32.5%


Difference

Notes: Estimates are based on model 6 in table 2, with other variables set to their mean values. Only effects statistically significant at p < .10 or better are reported.

positive but statistically insignificant. The weak-to-nonexistent effects of procedural democracy and civil liberties in my analyses are consistent with Boix’s () finding that democracy has little to no causal effect on development in the post–World War II period. Bodily Integrity Improvements and Growth: A Possible Mechanism

The evidence clearly demonstrates that improved bodily integrity scores significantly and substantially boost economic growth rates. Here I evaluate one plausible mechanism driving this effect. The proposed causal chain is straightforward: improved human rights practices beget increased domestic investment, which in turn spurs broader economic growth. Domestic investment is among the most important independent predictors of economic growth (Levine and Renelt ; Sala-i-Martin ), and it has also been shown to mediate between democracy and growth (Helliwell ; Kormendi and Meguire ; Kurzman et al. ). Democracy promotes investment by reassuring would-be investors that political conditions will remain stable and predictable (Feng ; Kurzman et al. ; Pastor and Sung ). Investors may similarly interpret improved human rights conditions as evidence that their societies are becoming more stable and therefore safer for investment (Farber ). My analytical strategy aims to test whether investment mediates the relationship between human rights improvements and economic growth. The first step is to show that increased respect for human rights is in fact linked to greater levels of investment. Table  presents OLS estimates for the effect of changes in countries’ bodily integrity scores on changes in investment as a percentage of GDP, each measured over five-year intervals between  and . Model  confirms that increased bodily integrity scores are associated with domestic investment growth, net of the same control variables as the main analysis; indeed, bodily integrity change scores represent the only statistically significant positive predictor in the model. For comparison, model  demonstrates that bodily integrity change scores do not explain changes in foreign direct investment (FDI). Improvements in bodily integrity rights therefore boost domestic but not foreign investment.15 Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

393

TABLE 4.

Effect of Changes in Bodily Integrity Scores on Changes in Domestic and Foreign Investment Change in Investment,

Change in FDI Stock,

% GDP (t, t−5)

% GDP (t, t−5)

Model 10

Model 11




.855*

.164

(.371)

(1.015)

−.169

1.360*

(.177)

(.599)

.003


.086***

(.005)

(.023)

−.426***

−.066

(.042)

(.090)


.020

.048

(.019)

(.043)


−.042

−.136

(.039)

(.111)


−.001***

.001

(.000)

(.000)

.034

−.144+

(.029)

(.074)

−.023

−.001

(.109)

(.357)

10.833***

−7.020+

(1.379)

(3.974)



Constant

F

23.82

df

6.23

9

9


898

658

N (countries)

137

136

+p < .10, *p < .05, **p < .01, ***p < .001 (two-tailed). Robust standard errors adjusted for homoskedasticity and clustering within countries in parentheses.

The next step is to consider whether investment mediates the relationship between human rights and economic growth. Models  and  in table  present IV-LIML and OLS estimates for the effect of bodily integrity change scores and domestic investment growth on five-year economic growth rates, net of control variables. (The base of table  reports the instruments used in these analyses, and as before diagnostic tests confirm their validity.) Domestic investment growth is a sizable and statistically significant predictor of overall economic growth, and its presence greatly attenuates the effect of changes in bodily integrity rights. Recall from table  that the effect of bodily integrity change scores was substantial 394


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395






Change in FDI stock, % GDP (t, t−5)

Change in investment, % GDP (t, t−5)

.107 (.070) −.296** (.110)

(.068) −.295** (.111)

(.144)

(.144) .111

.820***

(.012)

(.012) .821***

.021+

(.510)

(.514) .022+

−1.289*

(.147)

(.152)

−1.284*

1.127***

(.927)

(3.979) 1.135***

1.573+

OLS

IV-LIML .210

Model 13:

Model 12:

Domestic Investment Analyses

(.034)

(.113)

−.388***

(.082)

.253**

(.144)

.312*

(.017)

.040*

(.549)

(continued )

(.112)

−.391***

(.082)

.254**

(.144)

.309*

(.017)

.040*

(.551)

−2.016***

(.034) −2.023***

−.093**

(1.135)

3.267**

OLS

Model 15:

−.094**

(3.353)

4.020

IV-LIML

Model 14:

Foreign Investment Analyses

Exploring Whether Changes in Domestic and Foreign Investment Mediate the Effect of Changes in Bodily Integrity Scores on Economic Growth


TABLE 5.

396


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(.109)

(.111)

898 137 1965–2010 36.19*** 20.39

N (countries)

Observation period

Underidentification test

Weak identification testa

10


42.79

df

1965–2010

137

898

10

49.92

7.029+ (3.904)

6.932+ (4.007)

.382

−.395***

−.394***

(.353)

(.000)

(.001)

.387

−.006***

−.006***

(.356)

OLS

IV-LIML

F

Constant



Model 13:

Model 12:


33.70

43.19***

1975–2010

137

666

10

54.18

(4.777)

20.512***

(.383)

.469

(.135)

−.376**

(.000)

−.006***

IV-LIML

Model 14:

1975–2010

137

666

10

47.20

(4.770)

20.584***

(.384)

.466

(.135)

−.374**

(.000)

−.006***

OLS

Model 15:


Exploring Whether Changes in Domestic and Foreign Investment Mediate the Effect of Changes in Bodily Integrity Scores on Economic Growth (continued )


TABLE 5.


397

.01 (1.00) .12 (.73)


OLS

Model 13:

.07 (.80)

3.76 (.29)

2.52 (.28)

IV-LIML

Model 14:

OLS

Model 15:


model 12: five-year change in (logged) domestic conflict index; five-year change in regional bodily integrity score; five-year change in judicial independence score.

•

model 10: 8.68

model 12: 6.46

•

•

Instrumental variables diagnostic tests are as described at the base of table 1. a. Stock and Yogo (2005) critical value for evaluating Cragg-Donald Wald F weak identification test, 10 percent maximal IV size:

model 10: five-year change in (logged) domestic conflict index; five-year change in regional bodily integrity score.

•

+p < .10, *p < .05, **p < .01, ***p < .001 (two-tailed). IV-LIML = limited-information maximum-likelihood estimator with instrumental variables; OLS = ordinary least-squares estimator. Robust standard errors adjusted for homoskedasticity and clustering within countries in parentheses. External instruments for bodily integrity change score:

.00 (.95)

Orthogonality test (p value)

IV-LIML

Model 12:


Exploring Whether Changes in Domestic and Foreign Investment Mediate the Effect of Changes in Bodily Integrity Scores on Economic Growth (continued )


TABLE 5.

and positive, attaining a marginal level of statistical significance ( p = .) in the IV-LIML model and robust significance ( p < .) in the favored OLS model. Both the magnitude and the reliability of these effects diminish when changes in domestic investment are added to the analysis. Improvements in bodily integrity rights scores now represent, at best, a weakly positive and marginally significant predictor of growth, net of changes in domestic investment. Again for comparability, models  and  demonstrate that changes in foreign investment do not affect the relationship between human rights and growth. All told, improvements in basic human rights represent an important driver of economic growth, albeit one that is mediated at least partially by increased domestic investment. The intervening domestic investment mechanism may help to explain why changes in bodily integrity practices matter for growth, whereas levels do not: relative to static human rights practices at any given point in time, improvements in human rights practices over a short interval send a stronger signal that conditions are propitious for investment. Though the periods of instability that often accompany democratic transitions can lead to reduced growth rates (Papaioannou and Siourounis ), countries that improve their bodily integrity practices become more stable and secure, with positive externalities for economic growth. These signals, moreover, appear to be stronger for domestic than foreign investors. Domestic investors are directly threatened—if not always directly targeted—by physical repression in ways that foreign investors are not.16 DISCUSSION AND CONCLUSIONS

Ever since Seymour Martin Lipset () declared, “The more well-to-do a nation, the greater the chances that it will sustain democracy” (p. ), a long-standing research agenda in comparative social science has interrogated the relationship between democracy and economic growth. Despite more than a half century of research, the sequencing and polarity of this relationship remains contested: Does democracy “cause” development, or vice versa? And, whatever the causal ordering of the effect, is it positive or negative? Research has yet to explore the relationship between human rights and economic growth in a similarly rigorous fashion. Discerning the effects of rights on growth, while valuable in its own right, sheds new light on the convoluted nexus between democracy and development. My analysis of these effects focused on two categories of human rights: bodily integrity rights, which protect citizens from torture, disappearances, politically motivated imprisonment, state-sanctioned murder without due process, and other forms of physical repression; and civil liberties, including the freedoms of expression, assembly, religion, and movement. Between  and , governments that improved their bodily integrity practices experienced increased economic growth rates, measured as five-year changes in per capita GDP. This finding persists in the presence of other important explanatory factors, including levels of education, investment, trade, and an indicator of procedural democracy. The method used to estimate the finding rules out the possibility that causation flows instead from growth to rights improvements. Finally, the finding is based on a measure of human rights that minimizes bias due to changing standards of accountability over time. It is, in short, a robust finding. Static levels of bodily integrity rights protections, conversely, do not bear 398


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significantly on subsequent growth. Government respect for core civil liberties, whether measured statically or dynamically, also fails to predict growth rates. These results help make sense of democracy’s equivocal relationship with growth in the empirical literature. Neither competitive elections nor civil liberties—representing the procedural and substantive dimensions of democracy—predict rates of economic growth. Whereas procedural democracy and civil liberties are tightly linked, bodily integrity rights depend less on democracy for their protection. The “more murder in the middle” thesis (Fein ), for example, posits that the relationship between democracy and bodily integrity practices is U-shaped: respect for bodily integrity is strongest in fully institutionalized polities, whether democratic or autocratic, and weakest in mixed regimes that blend autocratic and democratic elements. As Glaeser and colleagues () point out, “In many poor countries . . . security came from policy choices made by dictators” (p. ). These patterns suggest that it is not democracy per se that promotes growth and development. Rather, something distinctive about basic human rights protections, and especially those relating to bodily integrity, fosters economic growth. Protection from egregious human rights abuse reduces generalized levels of fear, increases security, boosts investment, and results in higher rates of economic growth. Conversely, economic growth suffers when citizens fear that their governments will imprison them without cause or threaten their lives and livelihoods with impunity. None of this is to say, of course, that democracy or civil liberties are not desirable in their own right. Human rights are intrinsically valuable; as such, they cannot—and should not— be reduced to a calculus of economic costs and benefits. Even from the vantage point of instrumentality, this study analyzed economic growth in purely quantitative, not qualitative, terms. It did not consider whether growth benefits members of society equitably. Even if democracy and civil liberties do not increase aggregate rates of economic growth, they may improve distributional outcomes, promote human development, and increase well-being (Gerring, Thacker, and Alfaro ; Sen ). These and related questions need to be addressed if we are to gain a comprehensive understanding of the developmental consequences of human rights. APPENDIX A

Sampled Countries Afghanistan

Ghana

Norway

Albania

Greece

Pakistan

Algeria

Guatemala

Panama

Argentina

Guyana

Papua New Guinea

Armenia

Haiti

Paraguay

Australia

Honduras

Peru

Austria

Hungary

Philippines

Bahrain

Iceland

Poland

(continued )


399

Sampled Countries (continued )

400

Bangladesh

India

Portugal

Barbados

Indonesia

Qatar

Belgium

Iran

Romania

Belize

Ireland

Russian Federation

Benin

Israel

Rwanda

Bolivia

Italy

Saudi Arabia

Botswana

Japan

Senegal

Brazil

Jordan

Sierra Leone

Brunei Darussalam

Kazakhstan

Singapore

Bulgaria

Kenya

Slovakia

Burundi

Korea, Rep.

Slovenia

Cambodia

Kuwait

South Africa

Cameroon

Kyrgyzstan

Spain

Canada

Laos

Sri Lanka

Central African Republic

Latvia

Sudan

Chile

Lesotho

Swaziland

China

Liberia

Sweden

Colombia

Libya

Switzerland

Congo, Dem. Rep.

Lithuania

Syria

Congo, Rep.

Luxembourg

Tajikistan

Costa Rica

Malawi

Tanzania

Cote d’Ivoire

Malaysia

Thailand

Croatia

Maldives

Togo

Cuba

Mali

Tonga

Cyprus

Malta

Trinidad and Tobago

Czech Republic

Mauritania

Tunisia

Denmark

Mauritius

Turkey

Dominican Republic

Mexico

Uganda

Ecuador

Moldova

Ukraine

Egypt

Mongolia

United Arab Emirates

El Salvador

Morocco

United Kingdom

Estonia

Mozambique

United States

Fiji

Namibia

Uruguay

Finland

Nepal

Venezuela

France

Netherlands

Vietnam

Gabon

New Zealand

Yemen, Rep.

Gambia, The

Nicaragua

Zambia

Germany

Niger

Zimbabwe


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APPENDIX B

Instrumental Variable Diagnostics

This study uses two-stage limited-information maximum-likelihood estimators with instrumental variables (IV-LIML) and ordinary least-squares (OLS) estimators to analyze the effect of human rights scores on economic growth. The ability to obtain unbiased estimates from IV-LIML regression analyses hinges on the validity of the measures chosen to instrument human rights scores. Tables  and  in the main analysis report a battery of diagnostic tests for evaluating the validity of the selected instruments. Another way to assess instrument validity is to examine their independent effects on () their respective endogenous variables (bodily integrity and civil liberties scores, in terms of both levels and changes and () the structural dependent variable (five-year economic growth rates), net of control variables. At minimum, valid instruments will strongly and significantly predict human rights scores but not economic growth. Table A reports the results of OLS models for the effect of excluded instruments on lagged levels of human rights scores and five-year economic growth rates, net of control variables. Model A considers whether the selected instruments are relevant with respect to bodily integrity scores. The results clearly show that all three instruments—judicial independence, youth population, and voter participation rate—significantly predict bodily integrity rights scores at p < . or better. The model’s Angrist-Pischke F test of weak identification (Angrist and Pischke ), also reported in table A, safely exceeds the rule-of-thumb value of  proposed by Stock, Wright, and Yogo (), suggesting that the instruments are strongly relevant. To be valid, instruments must be exogenous as well as relevant—they must not be correlated with the error term of the structural equation, and hence they should not predict rates of economic growth. Although exogeneity cannot be assessed directly, model A, which regresses economic growth on the same instruments and control variables, provides an indirect test. None of the instruments for bodily integrity scores are reliably associated with growth when conditioned on other variables in the model, and the associated chi-squared test cannot reject the null hypothesis that the instruments jointly equal zero (χ = ., p = .). (Note that this test statistic and its p value are identical to the Anderson-Rubin weak-instrument-robust inference Wald test of orthogonality conditions reported in the main analyses.) Similar results obtain with respect to civil liberties: the excluded instruments—judicial independence and regional civil liberties scores—strongly predict civil liberties scores (model : Angrist-Pischke F test = ., p < .) but are orthogonal to economic growth rates (model : χ = ., p = .). Table A presents similar analyses for changes in human rights scores. Models A and A respectively assess relevancy and exogeneity of instruments for bodily integrity change scores. The remaining models evaluate instruments for civil liberties change scores: models A and A assess the overidentified model (with changes in judicial independence scores and lagged regional civil liberties scores entered jointly as instruments); models A and A evaluate the exactly identified model (with changes in judicial independence scores serving as the lone instrument). As before, diagnostic F tests for relevancy and chi-squared statistics for


401

402


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Judicial independence score (t−5)

Excluded Instruments

Democracy = 1 (t−5)








Included Instruments

−1.681 (3.451)

1.739*** (.448)

(2.134)

−.397**

.010

(.191)

(.001)

(.000)

(.124)

.013

−.007***

−.000

2.838

(.000)

(.112)

.011 (.015)

(.006)

−.007

−.331**

(.005)

−.052

(.010)

.149+ (.077)

−.002

(.971)

4.775***

(.372)

1.490***

(.013)

−.000

(.028)

−.020*

(.017)

−.017

.344** (.122)

(.006)

(.003)

.004

(.120)

−.035

Model A4:

(4.050)

2.623

(2.202)

1.686

(.141)

−.382**

(.001)

−.006***

(.115)

−.363**

(.084)

.228**

(.138)

.268+

(.015)

.041**

(.742)

−2.386**

5-year Economic Growth Rate

Civil Liberties Instruments

Civil Liberties (t−5)

−.004

.025+ (.013)

.007***

(.717)

(.002)

−1.187+

.099 (.064)

Model A2: 5-year Economic Growth Rate

Model A1: Bodily Integrity (t–5)

Model A3:

Assessing Identification and Orthogonality, Levels

Bodily Integrity Instruments

TABLE A1.


403

1965–2010

Observation period

—

Chi-sq. test of excluded

Model A3:

(.407)

—

33.56***

—

1975–2010

138

740

10

59.49

(1.073)

.44 (.80)

—

.426

1975–2010

138

740

10

25.18

(5.900)

23.103***

(.093) 5.224***

.038

.359***

.981

2.23 (.53)


Civil Liberties Instruments

Civil Liberties (t−5)

.403

1965–2010

138

905

11

41.05

+p < .10, *p < .05, **p < .01, ***p < .001 (two-tailed). Robust standard errors adjusted for homoskedasticity and clustering within countries in parentheses.

instruments (p value)

20.02***

Angrist-Pischke F test

.597

138

R-squared

905


11

N (countries)

34.48

(9.290)

(.804)

F

20.444*

−.471

(.050)

(.003)

(.289) −.063

(.025) .009**

−.067

−.099***

df

Constant

Regional civil liberties score (t−5)

Voter participation rate (t−5)

Population aged 15 to 24, % (t−5)


Model A1:

Bodily Integrity Instruments

Assessing Identification and Orthogonality, Levels (continued )

Bodily Integrity (t–5)

TABLE A1.

404


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(.001)

(.008)

(.023)

.001

(.010)

−.074

.003+

(.114)

−.015

(.113)

−.007***

.000+ (.000)

−.379***

.000 (.000)

(.002)

(.007)

(.109)

−.001

−.007

−.345**

.001 (.002)

(.458)

.569

(.139)

−.389**

(.001)

−.007***

(.113)

−.359**

(.084)

.231**

(.004)

.142*

−.000

.256+ (.141)

.000 (.008)

(.072)

(.002)

(.015)

.043**

(.001)

−.000

−2.126** (.676)

.051

A8: 5-year Growth Rate

(.041)

.003*

.339** (.125)

−.004*

A7: ΔCivil Liberties

Overidentified

(.002)

.023+ (.013)

.000

(.578)

−1.234*

(.000)

(.013)

.002


A5: ΔBodily Integrity

ΔBodily Integrity Instruments

.001

(.024)

−.029

(.009)

−.011

(.000)

.000+

(.006)

−.003

(.004)

.002

(.008)

.003

(.001)

−.001

(.034)

A10:

(.389)

.560

(.138)

−.387**

(.001)

−.007***

(.112)

−.357**

(.080)

.232**

(.138)

.257+

(.015)

.043**

(.576)

−2.141***

5-year growth rate

Exactly Identified

ΔCivil liberties

A9:

ΔCivil Liberties Instruments

OLS Models for the Net Effect of Included and Excluded Instruments on Changes in Rated Human Rights Practices and Economic Growth


Included Instruments

TABLE A2.


405

Constant

Regional civil liberties score (t−5)

ΔRegional bodily integrity score (t, t−5)

ΔDomestic conflict index, logged (t, t−5)

ΔVoter participation rate (t, t−5)

.551

18.476*** (4.679)

−.050 (.089)

−.030 (2.081)

.267*** (.065)

.092+ (.052)

.004*

(.114)

(.002)

−.074

(.004)

(7.501)

−.017***

(.313)

1.075***



ΔBodily Integrity Instruments A7:

A8:

(.490)

(5.717)

22.475***

(.434) .841+

−.029 (.036)

(8.345)

6.984

5-year Growth Rate

−.091*

(1.061)

5.387***

ΔCivil Liberties

Overidentified

5.291***

(.303)

.010

(1.068)

A10:

(continued )

(4.987)

22.213***

(8.223)

6.954

5-year growth rate

Exactly Identified

ΔCivil liberties

A9:


OLS Models for the Net Effect of Included and Excluded Instruments on Changes in Rated Human Rights Practices and Economic Growth (continued )

ΔJudicial independence score (t, t−5)

Excluded Instruments

TABLE A2.

406


WINTER 2016

138

.122 —

13.28***

A7:

4.36 (.36)

—

.114 15.10***

—

1975–2010

138

740

10

3.70

A8:

.73 (.69)

—

.427

1975–2010

138

740

10

31.35

5-year Growth Rate

Overidentified

ΔCivil Liberties

.404

1965–2010

138

905

11

21.24

+p < .10, *p < .05, **p < .01, ***p < .001 (two-tailed). Robust standard errors adjusted for homoskedasticity and clustering within countries in parentheses. Δ= Change.

(p value)

Chi-sq. test of excluded instruments

Angrist-Pischke F test

R-squared

1965–2010

N (countries)

Observation period

905

12

5.56



ΔBodily Integrity Instruments

—

24.06***

.105

1975-2010

138

740

9

3.73

A10:

.72 (.40)

—

.427

1975-2010

138

740

9

35.04

5-year growth rate

Exactly Identified

ΔCivil liberties

A9:


OLS Models for the Net Effect of Included and Excluded Instruments on Changes in Rated Human Rights Practices and Economic Growth (continued )


df

F

TABLE A2.

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NOTES

. Between  and , per capita GDP (in constant  US dollars) increased by  percent (from $, to $,) in Yugoslavia and by  percent (from $, to $,) in Singapore (Bolt and van Zanden ). . Even populist demands for income redistribution, criticized by proponents of the conflict perspective for inhibiting economic growth, can stimulate growth by expanding markets for consumer goods. . This is not to say that democracy is unimportant for development. Democracy exerts important indirect effects on growth by generating stability, increasing school enrollments, promoting investment, and improving aggregate health outcomes (see, e.g., Barro ; Baum and Lake ; Helliwell ; Kurzman et al. ). . Disaggregated analyses of this sort have been possible only since , when Freedom House published subcomponent scores for the first time. . A Mokken scaling analysis indicates that the civil liberties subcomponents tap a single underlying construct, making it possible to combine them into a cumulative scale (Møller and Skaaning :). . I have already discussed important limitations of the Freedom House civil liberties score, the most commonly used measure of human rights in the economic growth literature. Møller and Skaaning () and Munck and Verkuilen () offer an extended discussion of these limitations. . In supplementary analyses (not reported but available on request), I analyzed the growth effects of an additive index of CIRI subcomponent scores that correspond to the CLD measure: the freedoms of speech and press, assembly and association, domestic and foreign movement, and religion. Results were similar in sign and significance to those reported here. . I also examined the effect of bodily integrity rights scores on a restricted sample comprising the same observations as the civil liberties analysis (N = ). These results—not reported but available on request—were substantively similar to those obtained from using the full sample (N = ). . Tests of Granger causality do not establish “causality” per se; they merely establish time order. In this case, past values of economic development (measured as per capita gross domestic product) significantly predict democracy scores over and above past levels of democracy, whereas past values of democracy do not predict development when past levels of development are controlled. . Judicial independence would be a poor instrument to the extent that it also predicts economic growth—for example, via the protection of property rights or the enforcement of contracts. Diagnostic tests presented below, however, indicate that the instrument satisfies the exclusion restriction when conditioned on control variables. . Importantly for the present analysis, Urdal () reports that rates of economic growth or contraction do not mediate the relationship between youth bulges and political violence. Cole | The Effects of Human Rights on Economic Growth, 1965 to 2010

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. I also tried alternative measures of democracy, all of which produced similar results. These measures include the widely used ACLP (Alvarez et al. ) or DD indicator of democracy and dictatorship, as updated by Cheibub et al. (); the Polity Scale (Marshall et al. ), which partially conflates the procedural and substantive aspects of democracy (Hill and Jones ); and two components of the Polity Scale designed to isolate its procedural dimensions (an index of executive constraints and a dummy variable indicating whether a country holds competitive elections). The Boix et al. () measure enjoys the greatest temporal and spatial coverage. . The Cragg-Donald weak identification test statistic is evaluated against critical values proposed by Stock and Yogo (); see the base of table  for these critical values. IV estimators are always more biased than OLS estimators; the amount of bias increases as the instruments become weaker. Rejection of the null suggests that the degree of bias in the IV estimates relative to OLS is acceptably small. . The exogeneity of human rights to economic growth is consistent with research showing that economic development has no systematic effect, whether positive or negative, on democracy. Przeworski et al. (, ) report that transitions to democracy—defined minimally as the adoption of legislative and executive elections with party competition—are random with respect to economic development. They do find, however, that wealthier countries are more likely to remain democratic through time. Acemoglu et al. (, ) similarly find no causal effect of income on various institutional and rights-based measures of democracy. . Data for FDI, measured as inward stocks as a percentage of GDP, come from the United Nations (). . Mosley () contends that labor rights conditions often perform a similar signaling function for foreign investors.

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