IESET.
Hypotheses·growth·bukele_phase2_post_2024_authoritarian_growth_premium

El Salvador's second Bukele term (post-2024 inauguration, with continued régimen-de-excepción and worsening institutional-quality scores) maintains FDI inflows, GDP growth, and tourism arrivals trajectories established in 2019-2024 despite mounting authoritarianism critique (V-Dem electoral-democracy decline, WGI rule-of-law score continuing to fall, Freedom House "partly free" downgrade).

The hypothesis tests the institutional-quality-as-binding-constraint prediction: standard FDI literature (Daude-Stein 2007, Globerman-Shapiro 2003) implies that past a threshold, rule-of-law deterioration deters FDI. The pre-registered test asks whether the SLV growth/FDI premium relative to Central American peers persists or reverses in the 2024Q3-2026Q4 window when the rule-of-law trajectory has been negative for 5+ consecutive years.

PARTIALengine/runs/bukele_phase2_post_2024_authoritarian_growth_premium

PARTIAL — mean_gap=-0.3577, |gap|/pre_sd=0.051, p_perm=0.143 (gap below 0.5×pre_sd or placebo p≥0.10)

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

Over a long period, do more market-oriented institutions translate into higher income or productivity, once the comparison looks beyond a single success story?

plain answer

The evidence is suggestive but not decisive. mean_gap=-0.3577, |gap|/pre_sd=0.051, p_perm=0.143 (gap below 0.5×pre_sd or placebo p≥0.10)

why it matters

Growth claims can look convincing in single success stories. This test asks whether the pattern survives a broader comparison.

how the test works

It compares 7 country or place units from 2019 to 2026, using a synth did design.

what was measured
What changed
  • Bukele phase2 indicator
What we checked
  • Foreign investment inflow share income
  • Real income quarterly
  • Tourism arrivals
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/bukele_phase2_post_2024_authoritarian_growth_premium
1007550250201920232026SLVHNDGTMNICCRIPANDOM
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show fdi_inflow_share_gdp across 7 sampled countries over 2019–2026.
The shapes above are stylised — none of the lines are real data.
Placeholder for bukele_phase2_post_2024_authoritarian_growth_premium. Published chart will be generated from engine/runs/bukele_phase2_post_2024_authoritarian_growth_premium/chart_data.json.

Pre-registration

pre-registered
first-spec commit 098ce96 · 2026-04-30T12:57:33Z
run generated · 2026-04-30T10:15:30Z

El Salvador's second Bukele term (post-2024 inauguration, with continued régimen-de-excepción and worsening institutional-quality scores) maintains FDI inflows, GDP growth, and tourism arrivals trajectories established in 2019-2024 despite mounting authoritarianism critique (V-Dem electoral-democracy decline, WGI rule-of-law score continuing to fall, Freedom House "partly free" downgrade). The hypothesis tests the institutional-quality-as-binding-constraint prediction: standard FDI literature (Daude-Stein 2007, Globerman-Shapiro 2003) implies that past a threshold, rule-of-law deterioration deters FDI. The pre-registered test asks whether the SLV growth/FDI premium relative to Central American peers persists or reverses in the 2024Q3-2026Q4 window when the rule-of-law trajectory has been negative for 5+ consecutive years.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Refuted (institutional-quality binding constraint VERIFIED) if SLV FDI-share-of-GDP CATT over 2024Q3-2026Q4 is significantly negative versus the synthetic counterfactual at p < 0.10 permutation inference, OR if the continuous-rule-of-law-decline coefficient on FDI is significantly negative across the SLV trajectory. Supported (institutional-quality channel NOT binding for SLV in this window) if both tests are non-negative and the FDI trajectory remains within or above the synthetic-counterfactual band.

formal test & threshold
test:      synth_did_phase2_rule_of_law_binding_test
threshold: FDI CATT 2024Q3-2026Q4 not significantly negative AND rule-of-law-decline coefficient on FDI not significantly negative

Method

Template
synth_did
Clustering
country
Sample
7 countries · 2019 – 2026
Evidence type
causal

Primary: synth_did with SLV treated from 2024Q3 (post-Bukele-second-inauguration), Central American peer pool. Secondary: continuous-treatment specification with cumulative-rule-of-law-decline as the treatment intensity, testing whether more-deteriorated institutional quality is associated with FDI deceleration.

Data

VariableSourceTransform
fdi_inflow_share_gdp
outcome
world_bank_wdi:BX.KLT.DINV.WD.GD.ZStier 2
unctad:Worldtier 2
level
real_gdp_quarterly
outcome
world_bank_wdi:NY.GDP.MKTP.KDtier 2
sv_bcr:pib_real_quarterlytier 2
log_level_quarterly
tourism_arrivals
outcome
world_bank_wdi:ST.INT.ARVLtier 2
sv_mitur:visitor_arrivalstier 3
log_level_annual
sovereign_credit_spread
outcome
jp_morgan_embi:SLVtier 2
basis_points
bukele_phase2_indicator
treatment
constructed:binary = 1 for SLV from 2024-06-01 onwardtier 5
binary
wgi_rule_of_law
control
wgi:GOV_WGI_RL.ESTtier 4
level
vdem_electoral_democracy
control
vdem:v2x_polyarchytier 4
level
freedom_house_status
control
freedom_house:FIW_statustier 4
ordinal
us_policy_rate
control
fred:FEDFUNDStier 1
level
remittance_share_gdp
control
world_bank_wdi:BX.TRF.PWKR.DT.GD.ZStier 2
level
homicide_rate_log
control
unodc:intentional_homicidetier 2
log_level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — bukele_phase2_post_2024_authoritarian_growth_premium

Verdict: PARTIAL — mean_gap=-0.3577, |gap|/pre_sd=0.051, p_perm=0.143 (gap below 0.5×pre_sd or placebo p≥0.10)

Pre-registration

  • Claim: El Salvador's second Bukele term (post-2024 inauguration, with continued régimen-de-excepción and worsening institutional-quality scores) maintains FDI inflows, GDP growth, and tourism arrivals trajectories established in 2019-2024 despite mounting authoritarianism critique (V-Dem electoral-democracy decline, WGI rule-of-law score continuing to fall, Freedom House "partly free" downgrade). The hypothesis tests the institutional-quality-as-binding-constraint prediction: standard FDI literature (Daude-Stein 2007, Globerman-Shapiro 2003) implies that past a threshold, rule-of-law deterioration deters FDI. The pre-registered test asks whether the SLV growth/FDI premium relative to Central American peers persists or reverses in the 2024Q3-2026Q4 window when the rule-of-law trajectory has been negative for 5+ consecutive years.
  • Falsification rule: Refuted (institutional-quality binding constraint VERIFIED) if SLV FDI-share-of-GDP CATT over 2024Q3-2026Q4 is significantly negative versus the synthetic counterfactual at p < 0.10 permutation inference, OR if the continuous-rule-of-law-decline coefficient on FDI is significantly negative across the SLV trajectory. Supported (institutional-quality channel NOT binding for SLV in this window) if both tests are non-negative and the FDI trajectory remains within or above the synthetic-counterfactual band.

Synthetic-control estimate

  • shape: synth_did
  • treated_country: SLV
  • event_year: 2024
  • n_donors: 6
  • donor_weights (top): {'HND': 0.9553, 'NIC': 0.04, 'GTM': 0.0046, 'CRI': 0.0, 'PAN': 0.0}
  • pre_rmse: 0.6587059996724473
  • pre_period_sd: 7.0311449992159885
  • mean_post_gap: -0.3577212491353971
  • end_period_gap: -0.022798620977266815
  • post_period_years: [2024, 2026]
  • placebo_p_value: 0.14285714285714285
  • n_placebos: 6
  • method: synthetic-control via NNLS, permutation inference

Variables resolved

  • imf:NGDP_R; world_bank_wdi:NY.GDP.MKTP.KD; sv_bcr:pib_real_quarterly → real_gdp_quarterly (outcome, n=10914)
  • wgi:GOV_WGI_RL.EST → wgi_rule_of_law (controls, n=5322)

Generated by scripts/run_synth_did.py at 2026-04-30T10:15:30+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Phase-2 distinction from the 2019-2024 hypothesis is critical: the early Bukele term combined rapid security-channel improvement (homicide collapse) with rule-of-law deterioration, so the net FDI signal could be ambiguous. By 2024-2026 the security channel has saturated (homicides at floor) while the rule-of-law deterioration has accumulated. If FDI continues to grow in this later window, the hypothesis "institutional-quality channel is not binding" is supported. If FDI plateaus or reverses, the hypothesis is refuted and the Bukele growth story is reframed as a one-time security-channel effect that does not generalise.

Authored framework. Read the transparency note.