In the decade since my first post on
this topic there has been an explosion
in interest regarding whether having
a monarchy has tangible effects on a
country's development. As it turns out
a growing body of research says it does
(sometimes to the surprise of the
researchers themselves). Today I
wanted to highlight two studies I've
recently come across regarding the nurturing of good
economic institutions and results.
this topic there has been an explosion
in interest regarding whether having
a monarchy has tangible effects on a
country's development. As it turns out
a growing body of research says it does
(sometimes to the surprise of the
researchers themselves). Today I
wanted to highlight two studies I've
recently come across regarding the nurturing of good
economic institutions and results.
Republics and Monarchies: A Differential Analysis of
Economic Growth Link is a study published in 2019 by
Professors Collins C. Ngwakwe and Mokoko P. Sebola of the
University of Limpopo, South Africa. The study notes that
economic growth between constitutional monarchies and
republics is not statistically significant. However, it was
found that, even if not statistically significant constitutional
monarchy did still edge out republics slightly in mean GDP.
The primary finding of the paper was that constitutional
monarchies had a lower variance statistic (a measure of
instability) than republics and seems to indicate they are
more economically stable. Readers might recall that one of
the first studies I looked at (The 2008 study by Christian
Bjørnskov & Peter Kurrild‐Klitgaard) noted that over short
time frames republics handle institutional reforms poorly
before 'bouncing back'. This would account for a higher
instability score at a more zoomed out time frame. The
explanation they provide is also interesting;
Economic Growth Link is a study published in 2019 by
Professors Collins C. Ngwakwe and Mokoko P. Sebola of the
University of Limpopo, South Africa. The study notes that
economic growth between constitutional monarchies and
republics is not statistically significant. However, it was
found that, even if not statistically significant constitutional
monarchy did still edge out republics slightly in mean GDP.
The primary finding of the paper was that constitutional
monarchies had a lower variance statistic (a measure of
instability) than republics and seems to indicate they are
more economically stable. Readers might recall that one of
the first studies I looked at (The 2008 study by Christian
Bjørnskov & Peter Kurrild‐Klitgaard) noted that over short
time frames republics handle institutional reforms poorly
before 'bouncing back'. This would account for a higher
instability score at a more zoomed out time frame. The
explanation they provide is also interesting;
"The paper provides practical recommendation that being a republic is not a
sufficient panacea for economic growth if the excesses that retard growth are left
unbridled, these includes inter alia undue interference that obscures economic
certainty for investors."
Readers will also note that my last article I published on this
topic in 2018 had a study by Mauro Guillén that found pretty
much the same thing. The mechanism for encouraging less
messing around in the economy for economic gain are not
fully understood but I will provide one theory of my own.
When traditional monarchies were in the process of turning
into constitutional monarchies, perhaps the aim of parliament
was to prevent the monarchy from interfering in the economy.
But once the politicians were in control, the very same limits
that they had created now limited them in this regard.
Republics have had no such incentives as the presidency is an
institution they hope to one day hold and placing limits on it
may be seen as self-defeating. As such, economic interference
by the executive is allowed to continue unabated.
Disclaimer: This theory is just based on what evidence I
have from these studies and my own knowledge of history, it
could be completely wrong.
The next study was published in 2018 before I had written my
last article but it was published in an off-line economics
journal in Scotland. So it was a bit harder to get ahold of. I've
recently discovered the joys of inter-library loans so don't be
surprised if more studies are highlighted from similar
sources. 'God Save The Queen, God Save Us All? Monarchies
And Institutional Quality' by Prof. Sebastian Garmann is a bit
more beefy and had numerous conclusions. Note that due to
this study being a bit harder for people to get ahold of
themselves I've quoted far more of the results than I
otherwise would have. Also note that this researcher didn't
separate constitutional and absolute monarchies and applies
to both.
1. Base line results:
"Most importantly, I find highly significant (at the 1% level)
effects of monarchy on institutional quality for all six
indicators. In most cases, the t-statistic exceeds five. As the
indicators have been normalized to a standard deviation of
one, the coefficients can simply be interpreted in terms of
standard deviations. The maximum effect is found for
“Control of corruption”, for which the estimate suggests that
monarchy is associated with an increase in approximately
one standard deviation. The lowest effect, which is found for
“Voice and accountability”, still suggests an increase in more
than 0.4 standard deviations. The effects are thus of a very
large magnitude."
2. Mediating Factors:
"In the robustness checks, I show that the results still hold
when all control variables are included simultaneously."
3. Geographic Mediators
"While the coefficients of main interest slightly drop in size,
they all stay statistically significant. With the exception of
“Voice and accountability” as the outcome, all monarchy
effects are even significant at the 1% level with large t-
statistics. Thus, geographical factors cannot explain away
the positive association between monarchy and institutional
quality."
4. Historical Mediators
"From the historical variables, the legal origin indicators
show that all legal origins perform better than Socialist legal
origin. However, only Scandinavian and German legal
origin is significant in most specifications. The other control
variables also seldom show any significant effects.
Importantly, the monarchy effects stay highly significant
and of a very large magnitude. Thus, historical factors
cannot explain away the association between monarchy and
institutional quality."
5. Socioeconomic mediators
"From the control variables, GDP per capita has – as
expected – a highly significant positive influence on
institutional quality. The same is true in some cases for
population density, which obviously seems more important
than population size per se. ... Most importantly, monarchy
is still significantly associated with most indicators, and the
magnitude of the coefficients stays roughly the same. The
only exceptions are the outcomes “Political stability and
absence of violence” as well as “Voice and accountability”,
for which the monarchy effect is marginally insignificant (p-
values 0.126 and 0.138). However, the magnitude of these
effects is comparable to the magnitudes seen in Tables 1–3
and the marginal insignificance therefore was likely caused
by the strong decline in the number of observations (and
thus also in the available degrees of freedom). ... It is
interesting to assess the magnitude of the monarchy effect.
For example, consider the outcome “Government
effectiveness”. Going from a republic to a monarchy
increases this indicator by approximately 0.4 standard
deviations. As a comparison, an increase in the Polity2 index
of 1 point increases this indicator by approximately 0.025
standard deviations. Thus, taking these estimates at face
value, a change in the constitutional form from a republic to
a monarchy would have, ceteris paribus, the same effect as
an increase in the polity2 index of 16 points. As the polity2
index ranges from -10 to 10, this would imply that a change
from a republic to a monarchy would have approximately
the same effect on “Government effectiveness” as going from
a (moderate) autocracy (“anocracy” according to Fearon
and Laitin, 2003) to a full democracy. Thus, the estimated
monarchy effects are extremely large and meaningful."
As always, the new studies have been added to Useful Links.
Loyally Yours,
A Kisaragi Colour
topic in 2018 had a study by Mauro Guillén that found pretty
much the same thing. The mechanism for encouraging less
messing around in the economy for economic gain are not
fully understood but I will provide one theory of my own.
When traditional monarchies were in the process of turning
into constitutional monarchies, perhaps the aim of parliament
was to prevent the monarchy from interfering in the economy.
But once the politicians were in control, the very same limits
that they had created now limited them in this regard.
Republics have had no such incentives as the presidency is an
institution they hope to one day hold and placing limits on it
may be seen as self-defeating. As such, economic interference
by the executive is allowed to continue unabated.
Disclaimer: This theory is just based on what evidence I
have from these studies and my own knowledge of history, it
could be completely wrong.
The next study was published in 2018 before I had written my
last article but it was published in an off-line economics
journal in Scotland. So it was a bit harder to get ahold of. I've
recently discovered the joys of inter-library loans so don't be
surprised if more studies are highlighted from similar
sources. 'God Save The Queen, God Save Us All? Monarchies
And Institutional Quality' by Prof. Sebastian Garmann is a bit
more beefy and had numerous conclusions. Note that due to
this study being a bit harder for people to get ahold of
themselves I've quoted far more of the results than I
otherwise would have. Also note that this researcher didn't
separate constitutional and absolute monarchies and applies
to both.
1. Base line results:
"Most importantly, I find highly significant (at the 1% level)
effects of monarchy on institutional quality for all six
indicators. In most cases, the t-statistic exceeds five. As the
indicators have been normalized to a standard deviation of
one, the coefficients can simply be interpreted in terms of
standard deviations. The maximum effect is found for
“Control of corruption”, for which the estimate suggests that
monarchy is associated with an increase in approximately
one standard deviation. The lowest effect, which is found for
“Voice and accountability”, still suggests an increase in more
than 0.4 standard deviations. The effects are thus of a very
large magnitude."
2. Mediating Factors:
"In the robustness checks, I show that the results still hold
when all control variables are included simultaneously."
3. Geographic Mediators
"While the coefficients of main interest slightly drop in size,
they all stay statistically significant. With the exception of
“Voice and accountability” as the outcome, all monarchy
effects are even significant at the 1% level with large t-
statistics. Thus, geographical factors cannot explain away
the positive association between monarchy and institutional
quality."
4. Historical Mediators
"From the historical variables, the legal origin indicators
show that all legal origins perform better than Socialist legal
origin. However, only Scandinavian and German legal
origin is significant in most specifications. The other control
variables also seldom show any significant effects.
Importantly, the monarchy effects stay highly significant
and of a very large magnitude. Thus, historical factors
cannot explain away the association between monarchy and
institutional quality."
5. Socioeconomic mediators
"From the control variables, GDP per capita has – as
expected – a highly significant positive influence on
institutional quality. The same is true in some cases for
population density, which obviously seems more important
than population size per se. ... Most importantly, monarchy
is still significantly associated with most indicators, and the
magnitude of the coefficients stays roughly the same. The
only exceptions are the outcomes “Political stability and
absence of violence” as well as “Voice and accountability”,
for which the monarchy effect is marginally insignificant (p-
values 0.126 and 0.138). However, the magnitude of these
effects is comparable to the magnitudes seen in Tables 1–3
and the marginal insignificance therefore was likely caused
by the strong decline in the number of observations (and
thus also in the available degrees of freedom). ... It is
interesting to assess the magnitude of the monarchy effect.
For example, consider the outcome “Government
effectiveness”. Going from a republic to a monarchy
increases this indicator by approximately 0.4 standard
deviations. As a comparison, an increase in the Polity2 index
of 1 point increases this indicator by approximately 0.025
standard deviations. Thus, taking these estimates at face
value, a change in the constitutional form from a republic to
a monarchy would have, ceteris paribus, the same effect as
an increase in the polity2 index of 16 points. As the polity2
index ranges from -10 to 10, this would imply that a change
from a republic to a monarchy would have approximately
the same effect on “Government effectiveness” as going from
a (moderate) autocracy (“anocracy” according to Fearon
and Laitin, 2003) to a full democracy. Thus, the estimated
monarchy effects are extremely large and meaningful."
As always, the new studies have been added to Useful Links.
Loyally Yours,
A Kisaragi Colour
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