IESET.
Hypotheses·institutional quality·rule_of_law_institutional_growth

Across countries 1996-2023, higher WGI Rule of Law (RL) scores predict higher subsequent real per-capita GDP growth, conditional on standard controls (initial income, investment share, trade openness, demographic composition).

The relationship is consistent with the Acemoglu-Robinson institutional-growth hypothesis: property rights, contract enforcement, and impartial adjudication raise the expected return on productive investment and lower the cost of transactions, producing a compounding growth advantage that is not reducible to geography, culture, or initial income. The pre- registered claim is that within-country increases in RL over 5-year blocks positively predict next-block growth, and that cross- sectional rule-of-law level correlates positively with country-mean growth, with effect size consistent with the Kaufmann-Kraay 2002 and Acemoglu-Johnson-Robinson 2001 ranges.

PARTIALengine/runs/rule_of_law_institutional_growth

PARTIAL — coef=+5.028e-17, p=0.0526; effect magnitude effectively zero

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. coef=+5.028e-17, p=0.0526; effect magnitude effectively zero

why it matters

This matters because institutional quality claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 60 country or place units from 1996 to 2023, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Wgi rule of law
What we checked
  • Real income per capita growth 5yr forward
  • Gross fixed capital formation growth
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/rule_of_law_institutional_growth
descriptive sketch · model not yet run
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Who has skin in the game — schools predicting on this

3 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Classical Liberalwins if SUPPORTEDpartial/no-callEmpirical Pragmatist (the framework's house position)wins if SUPPORTEDpartial/no-callNew Institutional Economicswins if SUPPORTEDpartial/no-call

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:53:25Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

Across countries 1996-2023, higher WGI Rule of Law (RL) scores predict higher subsequent real per-capita GDP growth, conditional on standard controls (initial income, investment share, trade openness, demographic composition). The relationship is consistent with the Acemoglu-Robinson institutional-growth hypothesis: property rights, contract enforcement, and impartial adjudication raise the expected return on productive investment and lower the cost of transactions, producing a compounding growth advantage that is not reducible to geography, culture, or initial income. The pre- registered claim is that within-country increases in RL over 5-year blocks positively predict next-block growth, and that cross- sectional rule-of-law level correlates positively with country-mean growth, with effect size consistent with the Kaufmann-Kraay 2002 and Acemoglu-Johnson-Robinson 2001 ranges.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if either (a) the two-way FE panel coefficient on WGI RL is not positive and significant at 5% on 5-year-forward per-capita GDP growth, OR (b) the cross-sectional country-mean coefficient is not positive at 5%, OR (c) the coefficient collapses by more than 70% when WGI Government Effectiveness is added as a co-regressor (suggesting WGI RL is identifying off a general institutional quality factor rather than rule of law specifically). Support requires at least 2 of 3 conditions to be met; 3 of 3 is strong support.

formal test & threshold
test:      panel_plus_cross_section_plus_ge_robustness
threshold: At least 2 of 3 conditions: panel_FE_beta(RL) > 0 at p<0.05 AND cross_section_beta(RL_mean) > 0 at p<0.05 AND RL_coefficient_attenuation_when_GE_added < 70%

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
60 countries · 1996 – 2023
Evidence type
associational

Two-way FE panel with standard errors clustered by country. Primary identification from within-country variation in RL over 5-year blocks. Robustness: cross-sectional regression of country-mean growth 1996-2023 on country-mean RL, reported separately. IV robustness using Acemoglu-Johnson-Robinson 2001 settler-mortality instrument is noted as out of scope for v1 because the instrument's validity is contested (Albouy 2012) and the v1 spec sticks to panel-FE identification.

Data

VariableSourceTransform
real_gdp_per_capita_growth_5yr_forward
outcome
world_bank_wdi:NY.GDP.PCAP.KDtier 2
cumulative_log_growth_5yr_forward
gross_fixed_capital_formation_growth
outcome
world_bank_wdi:NE.GDI.FTOT.KD.ZGtier 2
5yr_forward_mean
wgi_rule_of_law
treatment
wgi:GOV_WGI_RL.ESTtier 4
level
initial_log_gdp_per_capita
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log_level_at_block_start
investment_share_of_gdp_initial
control
world_bank_wdi:NE.GDI.TOTL.ZStier 2
level_at_block_start
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
dependency_ratio
control
world_bank_wdi:SP.POP.DPNDtier 2
level
secondary_school_enrolment
control
world_bank_wdi:SE.SEC.ENRRtier 2
level
wgi_government_effectiveness
control
wgi:GOV_WGI_GE.ESTtier 4
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — rule_of_law_institutional_growth

Verdict: PARTIAL — coef=+5.028e-17, p=0.0526; effect magnitude effectively zero

Pre-registration

  • Claim: Across countries 1996-2023, higher WGI Rule of Law (RL) scores predict higher subsequent real per-capita GDP growth, conditional on standard controls (initial income, investment share, trade openness, demographic composition). The relationship is consistent with the Acemoglu-Robinson institutional-growth hypothesis: property rights, contract enforcement, and impartial adjudication raise the expected return on productive investment and lower the cost of transactions, producing a compounding growth advantage that is not reducible to geography, culture, or initial income. The pre- registered claim is that within-country increases in RL over 5-year blocks positively predict next-block growth, and that cross- sectional rule-of-law level correlates positively with country-mean growth, with effect size consistent with the Kaufmann-Kraay 2002 and Acemoglu-Johnson-Robinson 2001 ranges.
  • Falsification rule: Not supported if either (a) the two-way FE panel coefficient on WGI RL is not positive and significant at 5% on 5-year-forward per-capita GDP growth, OR (b) the cross-sectional country-mean coefficient is not positive at 5%, OR (c) the coefficient collapses by more than 70% when WGI Government Effectiveness is added as a co-regressor (suggesting WGI RL is identifying off a general institutional quality factor rather than rule of law specifically). Support requires at least 2 of 3 conditions to be met; 3 of 3 is strong support.
  • Falsification test: panel_plus_cross_section_plus_ge_robustness

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): +5.028e-17
  • Std error: 2.591e-17
  • p-value: 0.0526
  • Observations: 1013, countries: 50
  • Within R²: 1
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:NY.GDP.PCAP.KD → real_gdp_per_capita_growth_5yr_forward (outcome, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:NE.GDI.FTOT.KD.ZG → gross_fixed_capital_formation_growth (outcome, publisher=world_bank_wdi, n=7811)
  • wgi:GOV_WGI_RL.EST → wgi_rule_of_law (treatment, publisher=wgi, n=5296)
  • world_bank_wdi:NY.GDP.PCAP.KD → initial_log_gdp_per_capita (controls, publisher=world_bank_wdi, n=12104)
  • world_bank_wdi:NE.GDI.TOTL.ZS → investment_share_of_gdp_initial (controls, publisher=world_bank_wdi, n=10428)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:SP.POP.DPND → dependency_ratio (controls, publisher=world_bank_wdi, n=16935)
  • world_bank_wdi:SE.SEC.ENRR → secondary_school_enrolment (controls, publisher=world_bank_wdi, n=8175)
  • wgi:GOV_WGI_GE.EST → wgi_government_effectiveness (controls, publisher=wgi, n=5168)

Generated by scripts/run_panel_fe.py at 2026-06-29T17:53:25+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

This hypothesis deliberately restricts to the associational claim. The causal version (institutions cause growth rather than co-vary with it) requires stronger identification than WGI panel variation provides; the steelman addresses this and a v2 would use natural- experiment variation (colonial settler mortality, legal-origin heritage) to separate institutions-causes-growth from growth- causes-institutions.

Authored framework. Read the transparency note.