You are interested in explaining democratic backsliding. You are considering two models.

Model 1: Backsliding = 0 + 1GDP + 2GDP1000 + iControls + u

where GDP refers to the total GDP of the country and

GDP1000 indicates the value of GDP expressed in $1000.

Model 2: Backsliding = 0 + 1GDP + 2Globalisation + iControls + u

where globalisation is an index of economic openness.

Answer the following questions:

1. Assess the internal validity of model 1. Please justify your answer with as much as detail as possible.

2. What is the main challenge when estimating model 2? Please justify your answer with as much as detail as possible.