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section differences in milex along with most other cross section differences.

14. The assessment to define the political conditions variables was done by the author using the capsule political summaries for the post World War Two period in The Europe Year Book 1990 (two _-_ volumes). These summaries run 5 10 normal sized pages per country. Occasionally The Poliical Handbook of the World (1989) was used as a supplemental source. The following definitions were used. A time period for country 'Xi was considered one of political instability if there were coupes, attempted coupes, violent riots - dozens or more killed, significant gueriliA wa-fare, or major terrorist incidents 5 years or less apart. The situation was defined as one of civil war if regular internal armies fought, there was major guerilla warfare, or the suppression of dissent killed thousands of people - e.g. the peak of the "Dirty War" in Argentina. The situation was defined as international war if the country fought engagemernts - with significant casualties - with foreign country military forces. For the civil war and international war dummies, the situation was defined to exist only for the years hostilities were active. The years of civil war and international war were relatively few, but political instability, as here defined, existed for some (or all) years for the majority of the countries in the sample.

The regressors formed from the political dummy variables were also the average of 3 annual lagged values. The author had to produce his own political conditions measures because there are no suitable published indexes. Internal World Bank data on Central Government Expenditure - CGE - for the years 1972-88 - was also used. This CGE series was extended back to 1969 using the USACDA data. Where the above sources had missing values, that usually means an observation on that variable is missing. There are two exceptions to that rule. First, for the lagged regressors, they are the mean of available years, so that if one year of the three is missing, the value is the mean of two years. Second, the human capital series - enrollments, etc. - are generally not collected for every year and they would not normally jump around between collection dates. These series were interpolated, but not extrapolated. No other series were either interpolated or extrapolated.

15. The coefficients for PCP - per capita product - have the predicted negative sign and they are significant for the cross section regressions both on the full sample and the regions (full regional regression results are available from the author). In the differences regressions, DPCP has the predicted sign and is usually statistically significant, but the significance levels are lower than the cross section regressions (compare Tables 2 and 3). The negative and significant coefficients are consistent with the findings in Landau (1986) that, holding constant human capital, their is a 'catch up' effect among the LDCs. That is lower per capita countries would tend to grow faster if they invest sufficiently in human capital. The most plausible explanation for the 'catch up effect' is that the available 'shelf' of borrowable technologies is larger for lower per capita income countries.

The human capital regressor is the life expectancy - LIFE. LIFE has positive and highly signiflcant coefficients in virtually all the regressions. The ratio of official debt to GNP - DEBTS - has the expected negative coefficient and is highly significant in most regressions. The results for the change in terms of trade - CTOT, the share of oils exports in GNP - OILS, and the growth rate of the OECD countries - GRW - are mixed. Sometimes the coefficients have the expected signs and they are significant, and sometimes the coefficients are insignificant or the 'wrong' sign.

16. For the differences regressions with only DMES and DMES2 as explanatory variables, the predicted quadratic holds with DGRT as the dependent variable and there is a simple positive linear relationship with DGRNM as the dependent variable. These regressions are not in the Tables with this report, they are available from the author.