CH3 180sq

Facts at a glance

ALMOST
25 years after the start of the transition process, economic institutions in the transition region are, on average, still weaker than in other countries with comparable levels of income.

0.5 The correlation between measures of democracy and regulatory quality in a global sample of countries.

THE
3 -year period prior to accession saw a peak in terms of institutional improvements in EU accession countries.

OVER
33% of Kyrgyz SMEs say that unofficial payments are required in everyday business.

Economic institutions

Annex 3.2. Sources and definitions of variables for cross-country regressions

Details: Economic institutions

Variable	Source	Description
WGI average	World Bank, 2012	Average of four Worldwide Governance Indicators: rule of law, government effectiveness, control of corruption and regulatory quality. Each index is on a scale of -2.5 (lowest rank) to 2.5 (highest rank).
Distance to the frontier	World Bank, 2013	This measures an economy's distance to the frontier on a scale of 0 to 100, where 0 represents the lowest performance and 100 denotes the frontier (that is to say, the most business-friendly regulations) in the Doing Business report.
Transition indicator average	EBRD, 2013	Average of six country-level transition indicators (large-scale privatisation, small-scale privatisation, enterprise restructuring, price liberalisation, reform of the trade and foreign exchange system, and competition policy). The measurement scale for the indicators ranges from 1 to 4.33, where 1 represents little or no change relative to a rigid centrally planned economy and 4.33 represents the standards of an industrialised market economy.
Polity2	Polity IV, 2013	The "Polity score" captures a regime's level of democratisation on a 21-point scale ranging from -10 to +10, where +10 denotes the highest score for democratisation.
Natural resources	EBRD calculations, based on WTO data	Mining as a percentage of exports.
Trade openness	EBRD calculations	Trade openness is structurally adjusted following the adjusted trade intensity approach used by Pritchett (1996). Values in the sample range from -1.2 to 3.4.
Financial openness	Chinn-Ito index	Index measuring a country's degree of capital account openness. The index ranges from -1.86 to 2.44.
Income	Penn World Tables 8.0	Log of GDP per capita in 2005 US dollars at purchasing power parity.
Ethnic fractionalisation	Wacziarg et al., 2012	Measures the probability that two randomly selected individuals in a given community belong to different ethnic groups.
Distance from the equator	CEPII	Absolute latitude.
Landlocked	CEPII	Dummy variable.
Ruggedness	Nunn and Puga, 2012	This index quantifies topographic heterogeneity (small-scale irregularities) in a country. Values in the sample range from 0 to 6.2.
State antiquity index	Chanda and Putterman, 2007	The state antiquity index (version 3) measures the extent of each country's experience with nationhood and is based on the following criteria for each country: (1) the existence of a government at the tribal level; (2) whether the government is local or foreign-based; (3) how much of the territory of the modern country was ruled by this government.
Majoritarian system	Comparative Political Dataset II	Discrete variable that takes the following values: 0 - proportional representation; 1 - parallel system (the chamber is elected using both majoritarian and proportional representation systems, and each is allocated a fixed number of seats); 1 - compensatory system; 2 - modified proportional representation; 2 - majoritarian system.
Presidential system	Comparative Political Dataset II	Discrete variable that takes the following values: 0 - parliamentary system; 1 - semi-presidential system, dominated by parliament; 2 - semi-presidential system, dominated by president; 3 - presidential system; 4 - other system.
Polarisation index	Frye, 2010	Political polarisation is defined on the basis of the number of seats in parliament held by the largest opposition party.

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