We next construct a proxy for the change in political power (PolChange). Fifty-four percent of countries had parliamentary elections in any one year, consistent with a 4-year election cycle in the democratic world. OECD high-income countries had an average of 0.250 elections a year, the highest in the world. However, Brunei, China, Eritrea, Fiji, Guinea, Qatar, West Bank and Gaza and the Republic of Yemen did not have a single parliamentary election during 2003–2016. Most of these economies have presidential or hereditary royal systems.

In testing the effects of political change, we use as our main explanatory variable not just the occurrence of elections, but when these elections lead to a change of control over parliament from one party or coalition of parties to another. During the sample period, 223 changes of power took place.

The data suggest that such change of power varies widely across countries by income group. More than 60 percent of political changes during the sample period took place in high-income and upper-middle-income countries, while only 12 percent of changes occurred in lower-income countries. Serbia had the highest number of political changes in the sample period (five), Bulgaria, Latvia and Slovenia had four changes of power.

In extended regressions, we use variables for population growth, the inflation rate, and public spending on education and health care to test the robustness of our analysis. These data come from the World Bank’s World Development Indicators database.

**Table 1**

Variable definition.

|Variable|Description|
|---|---|
|Poverty|Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population).<br>_Source:_WDI, World Bank.|
|Business formation|To measure entrepreneurial activity, annual data was collected from<br>143 company registrars on the number of newly registered firms. New<br>business entry is defined as the number of newly registered<br>corporations per 1000 working-age people (those ages 15–64). As in<br>the World Bank’s annual Doing Business report, the units of<br>measurement are private, formal sector companies with limited<br>liability._Source:_World Bank’s Entrepreneurship Survey and database<br>(econ.worldbank.org/research/entrepreneurship).|
|Doing Business index|Aggregate Doing Business distance to frontier (DTF) score. An<br>economy’s distance to frontier is reflected on a scale from 0 to 100,<br>where 0 represents the lowest performance and 100 represents the|
||frontier._Source_: Doing Business,www.doingbusiness.org|
|Starting a Business|Starting a Business topic distance to frontier (DTF) score._Source_: Doing<br>Business,www.doingbusiness.org|
|Acquiring Licenses|Dealing with Construction Permits topic distance to frontier (DTF)<br>score._Source_: Doing Business,www.doingbusiness.org|
|Getting Credit|Getting Credit topic distance to frontier (DTF) score._Source_: Doing<br>Business,www.doingbusiness.org|
|Enforcing Contracts|Enforcing Contracts topic distance to frontier (DTF) score._Source_:<br>Doing Business,www.doingbusiness.org|
|Income per capita|One year lag of natural log of GDP per capita (current USD)._Source:_<br>WDI, World Bank|
|PolChange|Dummy equal to 1 if an alternation of political parties or coalitions<br>took place 12 months prior to the start of the_Doing Business_reforms|

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