IESET.
Hypotheses·institutional quality·state_capacity_precedes_liberal_market

State capacity (proxied by government effectiveness, rule of law, and fiscal extraction) is a prerequisite for effective liberal market policy.

Countries with stronger early state capacity experience larger growth premiums from subsequent market-opening reforms than countries with weak state capacity. The test uses a temporal sequencing design: state-capacity proxies measured in an early window (1996-2005) are used to predict the growth premium from trade openness in a later window (2005-2019).

PARTIALengine/runs/state_capacity_precedes_liberal_market

partial

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

policy briefMixed or noisy

In ordinary language

When countries open more of the economy to trade and competition, do people end up with better long-run income or productivity outcomes?

plain answer

The evidence is suggestive but not decisive. partial

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 22 country or place units from 1996 to 2019, using a descriptive design.

what was measured
What changed
  • Early state capacity
  • Later trade openness
What we checked
  • Income per capita 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

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

Results

engine/runs/state_capacity_precedes_liberal_market
1007550250199620082019USAGBRCANAUSNZLDEUFRA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show gdp_per_capita_growth across 22 sampled countries over 1996–2019.
The shapes above are stylised — none of the lines are real data.
Placeholder for state_capacity_precedes_liberal_market. Published chart will be generated from engine/runs/state_capacity_precedes_liberal_market/chart_data.json.

Who has skin in the game — schools predicting on this

9 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 MIXEDpartial/no-callStructuralist / Developmentalistwins if SUPPORTEDpartial/no-callEmpirical Pragmatist (the framework's house position)wins if SUPPORTEDpartial/no-callNew Institutional Economicswins if SUPPORTEDpartial/no-callNew Keynesian (mainstream synthesis)wins if SUPPORTEDpartial/no-callOrdoliberalism (Freiburg School)wins if SUPPORTEDpartial/no-callSocial Democraticwins if SUPPORTEDpartial/no-call

Pre-registration

pre-registered
first-spec commit 4467b9f · 2026-05-02T22:38:16Z

State capacity (proxied by government effectiveness, rule of law, and fiscal extraction) is a prerequisite for effective liberal market policy. Countries with stronger early state capacity experience larger growth premiums from subsequent market-opening reforms than countries with weak state capacity. The test uses a temporal sequencing design: state-capacity proxies measured in an early window (1996-2005) are used to predict the growth premium from trade openness in a later window (2005-2019).

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if high-GE countries show a significantly stronger trade-openness growth premium than low-GE countries. REFUTED if the premium is reversed or near-zero across both groups. Otherwise PARTIAL.

formal test & threshold
test:      state_capacity_trade_openness_interaction
threshold: [object Object]

Method

Template
descriptive
Sample
22 countries · 1996 – 2019
Evidence type
associational

Cross-sectional interaction of early state capacity and later trade openness on growth.

Data

VariableSourceTransform
gdp_per_capita_growth
outcome
world_bank_wdi:NY.GDP.PCAP.KD.ZGtier 2
mean_over_window
early_state_capacity
treatment
wgi:GOV_WGI_GE.ESTtier 4
mean_1996_2005
later_trade_openness
treatment
world_bank_wdi:NE.TRD.GNFS.ZStier 2
mean_2005_2019
initial_income
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log_2005_level
human_capital
control
pwt:hctier 3
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — state_capacity_precedes_liberal_market

Verdict: partial — High-GE trade premium +0.05pp, low-GE trade premium +0.83pp.

Cross-section of 177 countries. State capacity = mean WGI GE 1996-2005. Trade openness = mean WDI trade 2005-2019. Growth = mean WDI GDP pc growth 2005-2019.

Strongest opposing argument

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

Notes

Data readiness: - WGI GOV_WGI_GE.EST (ready from 1996) - WDI NY.GDP.PCAP.KD.ZG, NE.TRD.GNFS.ZS (ready) - PWT hc (ready)

Authored framework. Read the transparency note.