A Simultaneous Equation Model of Globalization, Corruption, Democracy, Human Development and Social Progress

Mishra, Sudhanshu K (2018): A Simultaneous Equation Model of Globalization, Corruption, Democracy, Human Development and Social Progress.

Abstract

This study builds a simultaneous equation model that establishes inter-connections among the measures of globalization, measures of democracy, human development, corruption perception index and per capita income, which in turn jointly influence social progress. The model has eleven equations in which the response variables and the predictor variables are log-linearly related. The empirical data used for estimation of the model pertain to the period 2006-2016 for 116 countries distributed over all the continents. The model has been estimated by the conventional Two-Stage Least Squares (2-SLS) and alternatively by a modified 2-SLS in which, at the second stage, Shapley value regression has been used to ameliorate the detrimental effects of collinearity among the predictor variables. It has been found that the modified 2-SLS outperforms the conventional 2-SLS. Empirically, it has been established that globalization, democracy, human development and low level of corruption are reinforcing each other and they together explain social progress quite well.

• Item Type: MPRA Paper
• Language: English
• Keywords: Globalization; democracy; corruption; human development; social progress; simultaneous equation model; Two-Stage Least Squares; collinearity; Shapley value regression.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C30 - General; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C36 - Instrumental Variables (IV) Estimation; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C57 - Econometrics of Games and Auctions; C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C61 - Optimization Techniques ; Programming Models ; Dynamic Analysis; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; F - International Economics > F6 - Economic Impacts of Globalization > F62 - Macroeconomic Impacts; F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration

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