**Appendix A.1: Definitions and Sources of Variables Used in Regression Analysis**

|**Variable**|**Definition and Construction**|**Source**|
|---|---|---|
|Terms of Trade|The terms of trade index shows the national accounts<br>exports price index divided by the imports price index.|World Development Indicators (2005,<br>2006) and Loayza et al. (2005)|
|GDP per capita growth|Log difference of real GDP per capita.|Authors' construction using data from<br>World Development Indicators (WDI),<br>The World Bank (2006).|
|Initial GDP per capita|Initial value of ratio of total real GDP to total population.|Authors' construction WDI, The World<br>Bank (2006).|
|Initial GDP per Capita<br>Cyclical Component|Difference between the logarithm of actual GDP per<br>capita and the logarithm of potential (trend) GDP. The<br>Hodrik-Prescott filter was used for the decomposition.|Authors' calculations using data from WDI<br>(2006)|
|Inflation|<br>The logarithm of 100 plus the inflation rate.|Author’s calculations with data from WDI<br>(2006)|
|Government<br>Expenditures|Ratio of government expenditures (in local currency) to<br>GDP (in local currency).|Data come primarily from International<br>Financial Statistics (IFS), 2006; when<br>missing, they are complemented with data<br>from WDI (2006) and UN National<br>Accounts Statistics (2006)|
|Human Capital<br>Investment|Ratio of total secondary enrollment, regardless of age, to<br>the population of the age group that officially corresponds<br>to that level of education.|Easterly and Sewadeh (2002), WDI (2006),<br>UNESCO (2006).|
|Governance|Average of three indices capturing the presence of law and<br>order, lack of corruption, and accountability of public<br>officials. Range is between 0 and 6.|International Country Risk Guide (ICRG),<br>Political Risk Services.<br>www.icrgonline.com|
|Trade Openness|Ratio of exports and imports (in local currency) to GDP<br>(in local currency).|Data come primarily from International<br>Financial Statistics (IFS), 2006; when<br>missing, they are complemented with data<br>from WDI (2006) and UN National<br>Accounts Statistics (2006)|
|Real Exchange Rate<br>Misalignment|Percentage difference between real effective exchange rate<br>and its estimated equilibrium value.|Authors' calculations. See Appendix A.1 for<br>the methodology.|
|Period-specific Shifts|Time dummy variables.|Authors’ construction.|
|Log lagged GDP/capita<br>Log lagged population|Gdp/pop based on pwt5.6, wdi2001,cow energy data<br>Log population, lagged except for first in country series<br>|Fearon and Laitin 2003<br>Fearon and Laitin 2003|
|Oil<br>Log of mountainous|More then 1/2 3 of export revenue from fuel|Fearon and Laitin 2003|
|<br>terrain|% Estimated mountainous terrain|Fearon and Laitin 2003|
|Instability|More than 2 points change in the polity 2 score in the last<br>3 years|Fearon and Laitin 2003|
|Lagged transitional<br>and interregnum regimes|<br>This the classification of political regimes along the lines<br>of executive recruitment [Executive recruitment involves|<br>Polity IV|
|Lagged democracy<br>Lagged factional<br>artial democrac|the ways in which superodinates come to occupy their<br>positions (Polity IV manual pp. 19)] and the<br>cometitiveness of cometitiveness of olitical||
|p y<br>Lagged non-factional<br>partial democracy|p p p<br>participation [The competitiveness of competitiveness of<br>political participation refers to the extent to which||
|<br>Lagged partial autocracy|<br>alternative preferences for policy and leadership can be<br>pursued in the political arena (Polity IV manual pp. 25)].||
|Coups|<br>Successful and attempted coups|Belkin and Schofer 2003|
|Riots||Banks; Cross National Tine Series Data<br>|
|Civil war|Violent demonstration with more than 100 participants|Archive<br>Sambanis 2004|

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