1.Let's look at one well-known set of tests, to see if what you learned in thi chapter matches the statistical evidence. Here are 17 variable that turned out to be very strong predictor of a nation's long-run economic performance in literally millions of statistical test (Source: Sala i-Martin, X., G. Doppelhofer, and R. Miller, Determinants of long-term economic growth:

A Bayesian averaging of classical estimates

(BACE). The American Economic Review, Vol. 94, No. 4 (Sep. 2004), pp. 813-835.) They are in rank order, and a "+" means more of that value was good for long-run productivity:

1. Whether a country is in East Asia ( +)

2. Level of K -6 schooling ( +)

3. Price of capital goods (- )

4. Fraction ofland close to the coast ( +)

5. Fraction of population close to the coast ( +)

6. Malaria prevalence (-)

7. Life expectancy ( +)

8. Fraction of population Confucian ( +)

9. Whether a country is in Africa (-)

10. Whether a country is in Latin America (-)

11. Fraction of GDP in mining industries ( +)

12. Whether a country was a Spanish colony (- )

13. Years open to relatively free trade ( +)

14. Fraction of population Muslim ( +)

15. Fraction of population Buddhist ( +)

16. Number oflanguages widely spoken (-)

17. Fraction of GDP spent on government purchases (-)

a. Which of the e factors sound like the

"three factors of production"? Which ones do they sound like?

b. Which of the e factors sound like the

"five key institutions"? Which ones do they sound like?

c. Which of the e factors sound like geography?

d. The western United State was a Spanish colony until 1849. On average, former Sp~nish colonies have had poor economic performance. Does the western United States fit that pattern? Why or why not?