# **Table A.2**

# **Definitions and Sources of Variables Used in Regression Analysis**

|**Variable**<br>|**Definition and Construction**<br>|**Source**<br>|
|---|---|---|
|Gini Coefficient|Gini Coefficient of Income Inequality (0-100), end of period, and<br>expressed in logs|Authors' construction using Deininger and Squire<br>(1996), Milanovic (2000) and World Bank's World<br>Development Indicators (WDI).|
|Real Income per capita|Ratio of real GDP (in US$ at 2000 prices) to total population,<br>beginning of period, and expressed in logs.|<br>Authors' construction using Summers, Heston and Aten<br>(2006)|
|Economic Growth|Log difference of real GDP per capita.|Authors' construction using Summers, Heston and Aten<br>(2006)|
|Education|Ratio of total secondary enrollment, regardless of age, to the<br>population of the age group that officially corresponds to that<br>level of education.|<br>Easterly and Sewadeh (2002) and The World Bank's<br>WDI|
|Financial Development|Domestic credit to the private sector as a percentage of GDP, in<br>los|Beck, Demirguc-Kunt and Levine (2001) and The World<br>Bank's WDI|
|Trade Openness|g<br>Exports and imports as a percentage of GDP, in logs. All<br>magnitudes expressed in US dollars at 2000 prices.|<br>Easterly and Sewadeh (2002) and The World Bank<br>(2003).|
|Lack of price stability|<br>CPI inflation rate, in logs. It is computed as log((1+_dp_)*100),<br>where_dp_is the inflation rate. This transformation smooths the<br>original variable and gives less weight to hyperinflation episodes.|Author’s calculations using data from IFS and the<br>publications of the Central Bank. The method of<br>calculations is based on Beck, Demiguc-Kunt and|
|Government Burden|General Government Consumption Expenditure as percentage of<br>GDP, average of period, and expressed in logs.|The World Bank's World Development Indicators and<br>IMF's Government Financial Statistics|
|Institutional Quality|ICRG Political Risk Index (in logs). The index includes the<br>following categories: Government Stability, Socio-Economic<br>Conditions, Investment Profile, Internal Conflict, External<br>Conflict, Corruption, Military in Politics, Religion Tensions, Rule<br>of Law, Ethnic Tensions, Democratic Accountability,<br>Bureaucratic Quality|International Country Risk Guide|
|Terms of Trade|<br>Net barter terms of trade index (2000=100)|The World Bank, World Development Indicators CD-<br>ROM|
|Terms of Trade Changes<br>Size of the modern sector|Log differences of the terms of trade index<br>Share of non-agricultural activities in total value added (in<br>percentages)|Authors' construction using WDI<br>The World Bank, World Development Indicators CD-<br>ROM|
|Telecommunications Infrastructure<br>Stock|(a) Main telephone lines per 1000 workers (in logs). (b) Main<br>telephone lines and mobile phones per 1000 workers (in logs).|Authors' construction using Canning (1999) and<br>International Telecommunication Union's World<br>Telecommunication Report|
|Quality of Telecommunication<br>Services|Waiting time for main telephone line installation. The variable was<br>rescaled such that it takes values between 0 and 1, with higher<br>numbers implying higher quality of telecommunication services.|<br>International Telecommunication Union's World<br>Telecommunication Report and the World Bank's World<br>Development Indicators|
|Infrastructure Stock of the Electricity<br>Sector|Electricity Generating Capacity (in MW per 1000 workers). The<br>variable was expressed in logs.|Authors' construction using Canning (1999), United<br>Nation's Energy Statistical Yearbook, and national<br>sources where available.|
|Quality of Electricity Services|Electric Power Transmission and Distribution Losses (as<br>percentage of electricity output). The variable was rescaled such<br>that it takes values between 0 and 1, with higher numbers<br>implying higher quality of telecommunication services.|<br>The World Bank's World Development Indicators and<br>national sources where available.|
|Road Network|(a) Length of total road network, and (b) Length of paved road<br>network. Both variables are measured in kilometers per sq. km. of<br>surface area of the country, and then expressed in logs|International Road Federation's World Road Statistics,<br>the World Bank's World Development Indicators, and<br>national sources where available.|
|Quality of the Road Network|Share of paved roads in the overal road network. This variables<br>takes values between 0 and 1, with higher numbers implying<br>higher quality of the road network.|International Road Federation's World Road Statistics,<br>the World Bank's World Development Indicators, and<br>national sources where available.|
|Synthetic Index of Infrastructure<br>Quantity|<br>First principal component of the three different dimensions of<br>infrastructure considered in our analysis: telecommunications,<br>electricity and roads. IK1 comprises information on main lines,<br>EGC, and total roads; IK2 on main lines, EGC and paved roads.<br>On the other hand, IK3 uses main lines and mobile phones, EGC<br>and total roads, while IK4 uses main lines and mobile phones,<br>EGC and paved roads|Author's calculations.|
|Synthetic Index of Infrastructure<br>Quality|First principal component of the three different dimensions of<br>infrastructure quality considered in our analysis:<br>telecommunications, electricity and roads. The synthetic index<br>considered transformations of waiting time for main line<br>installation, electricity transmission and distribution losses, and<br>|Author's calculations.|
|Period-specific Shifts|share of paved roads.<br>Time dummyvariables.|Authors’ construction.|

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