| This dissertation argues that informal political rules and the formal political rules of countries have different affects on various sectors of countries' economies. Political rules are the equivalent of political institutions significantly impact the way in which economies develop. The sectors of countries' economies studied in this dissertation include the growth rate of GDP per capita, the amounts of economic freedom and investment, and the size of the informal market. Another factor studied is the probability of economic convergence between countries, (or countries economies moving toward each other).; The selectorate model developed by Bueno de Mesquita, Smith, Siverson, and Morrow (2003) is extended in this dissertation by adding to this model a measure of corruption as a proxy for the informal political rules. The initial level of corruption, the growth rate of corruption, and the effect of increasing corruption on the formal political rules are examined. The variables 'quality of the bureaucracy,' 'law and order,' and the ratio W/S, (a ratio of the number of people who participate in the formal political rules and the credibility of those rules), measures the formal political rules.; Fixed effects regression is the method of statistical analysis used; the study time frame is 1970 to 2002, and covers 89 countries. The results of the analysis show that the effect of increasing corruption on the formal political rules has a major negative impact on countries' economic sectors, decreasing enforcement of those rules. The implication of the research is that some countries should completely reform their political systems in order to remove or reduce the effects of corruption. |
