One way to learn about what makes some countries richer is to run statistical tests to see which factors are good at predicting a nation's level of productivity. Sometimes, it turns out that a relationship is just a coincidence, like the fact that people in rich countries eat more ice cream. However, other statistical tests really can tell you about the ultimate causes of productivity. A statistical test cannot tell you everything, but it might help point you in the right direction. In courses on econometrics and statistics, you can learn about how to run sensible tests.

Let's look at one wellknown set of tests to see if what you learned in this chapter matches the statistical evidence. Here are 17 variables that turned out to be very strong predictors of a nation's longrun economic performance in literally millions of statistical tests. The variables are in rank order, and a "+" means more of that value was good for longrun productivity.

• Whether a country is in East Asia (+)
• Level of K6 schooling (+)
• Price of capital goods ()
• Fraction of land in tropical area ()
• Fraction of population close to the coast (+)
• Malaria prevalence ()
• Life expectancy (+)
• Fraction of population Confucian (+)
• Whether a country is in Africa ()
• Whether a country is in Latin America ()
• Fraction of GDP in mining industries (+)
• Whether a country was a Spanish colony ()
• Years open to relatively free trade (+)
• Fraction of population Muslim (+)
• Fraction of population Buddhist (+)
• Number of languages widely spoken ()
• Fraction of GDP spent on government purchases ()

a. Choose the variable(s) that sound like the three factors of production.

Level of K6 schooling

Price of capital goods

Fraction of GDP spent on government purchases

Malaria prevalence

b. Choose the variable(s) that sound like the five key institutions.

Life expectancy

Fraction of GDP in mining industries

Fraction of population Buddhist

Years open to relatively free trade

c. Choose the variable(s) that sound like geography.

Whether a country is in Africa

Fraction of land in tropical area

Whether a country is in East Asia

Whether a country is in Latin America