IESET.
Hypotheses·institutional quality·rule_of_law_market_reform_complementarity

Across a broad panel of economies 1980-2020, market reforms (privatisation, trade liberalisation, and price decontrol) produce durable gains in real GDP per capita growth only when rule-of-law scores exceed a minimum threshold (WGI Rule of Law > -0.5, approximately the 40th percentile of the global distribution).

Below this threshold, market reforms show insignificant or negative associations with growth. The pre- registered claim is that the interaction term between market- reform intensity and rule-of-law score is positive and significant at p<0.05, while the marginal effect of market reform at rule-of-law below -0.5 is not significantly positive.

REFUTEDengine/runs/rule_of_law_market_reform_complementarity

REFUTED — coef=-0.1483 (sign opposite claim +), p=0.00481

confidence cueThis test cuts against the claim as written or misses its pre-declared threshold.

policy briefClear refutation

In ordinary language

In plain terms, this asks whether market reform intensity index is actually linked to better or worse real income per capita growth from 1980 to 2020.

plain answer

The data did not support the prediction. coef=-0.1483 (sign opposite claim +), p=0.00481

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 55 country or place units from 1980 to 2020, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Market reform intensity index
  • Rule of law wgi
What we checked
  • Real income per capita growth
  • Productivity growth 5yr
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

8 input datasets, 0 unresolved missing series, provenance status: reproducible hash verified.

Results

engine/runs/rule_of_law_market_reform_complementarity
1007550250198020002020USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_gdp_per_capita_growth across 55 sampled countries over 1980–2020.
The shapes above are stylised — none of the lines are real data.
Placeholder for rule_of_law_market_reform_complementarity. Published chart will be generated from engine/runs/rule_of_law_market_reform_complementarity/chart_data.json.

Who has skin in the game — schools predicting on this

13 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.

Austrian Business Cycle Theory (ABCT)wins if MIXEDpartial/no-callChicago School Monetarismwins if MIXEDpartial/no-callClassical Liberalwins if SUPPORTEDschool refutedDemocratic Socialism (Bernsteinian revisionism + modern)wins if MIXEDpartial/no-callStructuralist / Developmentalistwins if MIXEDpartial/no-callEco-Socialism / Red-Greenwins if MIXEDpartial/no-callEmpirical Pragmatist (the framework's house position)wins if SUPPORTEDschool refutedNew Institutional Economicswins if SUPPORTEDschool refutedMarxism-Leninism (central-planning implementation)wins if MIXEDpartial/no-callNew Keynesian (mainstream synthesis)wins if MIXEDpartial/no-callOrdoliberalism (Freiburg School)wins if SUPPORTEDschool refutedPost-Keynesianwins if MIXEDpartial/no-callSocial Democraticwins if MIXEDpartial/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 a broad panel of economies 1980-2020, market reforms (privatisation, trade liberalisation, and price decontrol) produce durable gains in real GDP per capita growth only when rule-of-law scores exceed a minimum threshold (WGI Rule of Law > -0.5, approximately the 40th percentile of the global distribution). Below this threshold, market reforms show insignificant or negative associations with growth. The pre- registered claim is that the interaction term between market- reform intensity and rule-of-law score is positive and significant at p<0.05, while the marginal effect of market reform at rule-of-law below -0.5 is not significantly positive.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if (a) the interaction coefficient is not positive and significant at p<0.05, OR (b) the marginal effect of market reform is positive and significant even when rule-of- law is below -0.5 (no threshold effect), OR (c) the interaction becomes insignificant when post-Soviet transition countries are dropped (indicating the result is driven by one historical episode). A "market reform works everywhere" reading wins if (b) holds; a "institutions don't matter" reading wins if both main effect and interaction are insignificant.

formal test & threshold
test:      panel_fe_market_reform_rule_of_law_interaction
threshold: panel_FE_beta(market_reform × rule_of_law) > 0 at p<0.05 AND marginal_effect_reform_at_RL_minus_0.5 NOT > 0 at p<0.10 AND result robust to excluding POST_SOVIET at p<0.10

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
55 countries · 1980 – 2020
Evidence type
associational

Panel FE with interaction term: market_reform × rule_of_law. Primary test: significance and sign of interaction coefficient. Secondary: sub-sample analysis (rule-of-law above vs below threshold). Robustness: use Fraser EFW composite instead of constructed reform index; use V-Dem polyarchy instead of WGI RL as threshold measure; event-study around large reform episodes (post-Soviet transition, China's 1978, India's 1991) with rule-of-law pre-condition as moderator.

Data

VariableSourceTransform
real_gdp_per_capita_growth
outcome
world_bank_wdi:NY.GDP.PCAP.KD.ZGtier 2
level
tfp_growth_5yr
outcome
pwt:rtfpnatier 3
log_diff_5yr
market_reform_intensity_index
treatment
constructed:0.4×fraser_efw:privatisation + 0.3×fraser_efw:trade_openness + 0.3×fraser_efw:price_controlstier 5
level
rule_of_law_wgi
treatment
wgi:RL.ESTtier 4
level
rule_of_law_above_threshold
treatment
constructed:indicator = 1 if wgi:RL.EST > -0.5tier 5
indicator
log_initial_gdp_pc
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
human_capital_index
control
pwt:hctier 3
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
government_consumption_share
control
world_bank_wdi:NE.CON.GOVT.ZStier 2
level
inflation_rate
control
world_bank_wdi:FP.CPI.TOTL.ZGtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — rule_of_law_market_reform_complementarity

Verdict: REFUTED — coef=-0.1483 (sign opposite claim +), p=0.00481

Pre-registration

  • Claim: Across a broad panel of economies 1980-2020, market reforms (privatisation, trade liberalisation, and price decontrol) produce durable gains in real GDP per capita growth only when rule-of-law scores exceed a minimum threshold (WGI Rule of Law > -0.5, approximately the 40th percentile of the global distribution). Below this threshold, market reforms show insignificant or negative associations with growth. The pre- registered claim is that the interaction term between market- reform intensity and rule-of-law score is positive and significant at p<0.05, while the marginal effect of market reform at rule-of-law below -0.5 is not significantly positive.
  • Falsification rule: Not supported if (a) the interaction coefficient is not positive and significant at p<0.05, OR (b) the marginal effect of market reform is positive and significant even when rule-of- law is below -0.5 (no threshold effect), OR (c) the interaction becomes insignificant when post-Soviet transition countries are dropped (indicating the result is driven by one historical episode). A "market reform works everywhere" reading wins if (b) holds; a "institutions don't matter" reading wins if both main effect and interaction are insignificant.
  • Falsification test: panel_fe_market_reform_rule_of_law_interaction

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): -0.1483
  • Std error: 0.05246
  • p-value: 0.00481
  • Observations: 905, countries: 44
  • Within R²: 0.0449
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:NY.GDP.PCAP.KD.ZG → real_gdp_per_capita_growth (outcome, publisher=world_bank_wdi, n=13897)
  • pwt:rtfpna → tfp_growth_5yr (outcome, publisher=pwt, n=6407)
  • constructed: 0.4×fraser_efw:privatisation + 0.3×fraser_efw:trade_openness + 0.3×fraser_efw:price_controls → market_reform_intensity_index (treatment, publisher=market_reform_intensity_index, n=2255)
  • wgi:RL.EST → rule_of_law_wgi (treatment, publisher=wgi, n=5296)
  • constructed: indicator = 1 if wgi:RL.EST > -0.5 → rule_of_law_above_threshold (treatment, publisher=constructed, n=2255)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_initial_gdp_pc (controls, publisher=world_bank_wdi, n=12104)
  • pwt:hc → human_capital_index (controls, publisher=pwt, n=8637)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:NE.CON.GOVT.ZS → government_consumption_share (controls, publisher=world_bank_wdi, n=9133)
  • world_bank_wdi:FP.CPI.TOTL.ZG → inflation_rate (controls, publisher=world_bank_wdi, n=7550)

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

Fraser EFW sub-components provide the longest-run market-reform series. WGI Rule of Law begins in 1996; earlier years use backfilled Polity5 and V-Dem proxies with flagged uncertainty. The post-Soviet transition episode (1990-2000) provides the cleanest natural experiment but also the strongest leverage; robustness to its exclusion is essential.

Authored framework. Read the transparency note.