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Freedom and growth: Do constitutions matter?

In England, everything that is not prohibited is permitted; in Germany, everything that is not permitted is prohibited; in France, everything that is prohibited is permitted; in the USSR everything that is permitted is prohibited.

Democracy is good, but sausages are better.

Abstract

This paper uses an augmented Solow model, with cross section data, to measure the effect on per-capita income of a) the entrenchment of various rights in a country's constitution and b) the level of economic freedom in a country, broadly construed. The results suggest that entrenchment,per se, of any single right seldom has a significant general economic effect, while the effect of economic freedom is significant and substantial. The paper then considers whether such evidence could support the proposition that “constitutions do not matter.” While it concludes otherwise, it does caution against incurring excessive negotiation costs to obtain entrenchment of a comprehensive “wish list” of rights.

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Abbreviations

Bicamera:

1 for bicameral legislature (0 if unicameral). The majority of constitutions provide for a unicameral legislature (T & T, 703).

BillofR:

1 if ‘some form of a bill of rights’ is contained in the constitution. The majority of constitutions provide for a bill of rights (T & T, 706).

Federal:

1 if the system of government is federal (0 if unitary). The federal model has not been widely adopted (T & T, 702).

Home:

1 if the constitution lists the right to be secure in one's home (T & T, 706).

LnEduc:

The logarithm of the index of educational attainment (E). E = 2/3 Literacy + 1/3 Years of Schooling. Source: UNDPHuman Development Report 1991.

LnGIGDP:

The logarithm of Gross Domestic Investment/GDP averaged over 1985–1988. Source: UNDPHuman Development Report 1991.

LnIncap:

The logarithm of Real GDP per capita ($/POP) averaged over 1985–1988. Source: UNDPHuman Development Report 1991.

LnPopGr:

The logarithm of the average annual population growth rate (%), from 1960 to 1990. Source: UNDPHuman Development Report 1991.

Paper:

1 if the constitution lists the right to privacy of one's papers (T & T, 706).

Privacy:

1 if the constitution lists the right to privacy ‘broadly construed’ (T & T, 706).

Private:

1 if the constitution lists the right to have a private life (T & T, 706).

RCult:

1 if the constitution lists the right to culture (T & T, 707).

REduc:

1 if the constitution lists the right to education (T & T, 707).

Religion:

1 if the constitution lists the right to religious freedom (T & T, 703).

RHouse:

1 if the constitution lists a right to housing or adequate standard of living (T & T, 707).

RMedic:

1 if the constitution lists a right to medical care (T & T, 707).

RProf:

1 if the constitution lists a right to practice a profession (T & T, 707).

RRest:

1 if the constitution lists a right to rest and leisure (T & T, 707).

RSsecu:

1 if the constitution lists a right to social security (T & T, 707).

RUnion:

1 if the constitution lists a right to unionize (T & T, 707).

RWork:

1 if the constitution lists a right to work (T & T, 707).

Scully:

An overall index of economic liberty taking into account fifteen attributes (freedom of the foreign currency regime, of property, of information, of movement, of the print media, of internal travel...). Source: G. Scully & D. Slottje: ‘Ranking economic liberty across countries’ (Public Choice, 1991).

Search:

1 if the constitution lists a right to be free from unwarranted searches (T & T, 706).

Supreme:

1 if the constitution provides for a Supreme Court which has authority, of varying degrees, to deal with constitutional issues (T & T, 705).

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An earlier version of this paper was presented at the European Public Choice Society Meetings in Torino, Italy, 22 April 1992, at the “Constitutional Issues I” session. We would like to thank the participants of that session for their comments; we would also like to thank Doug Allen, Brian Bixley and anonymous referees for their comments on initial drafts.

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de Vanssay, X., Spindler, Z.A. Freedom and growth: Do constitutions matter?. Public Choice 78, 359–372 (1994). https://doi.org/10.1007/BF01047764

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Keywords

  • Public Finance
  • Economic Effect
  • Cross Section Data
  • Economic Freedom
  • Section Data