As Table 1.05 indicates, the empirical evidence is consistent with this theoretical expectation. The individual measures of the EDD/NEDD ratio (low regulatory density and the inverse of government spending<sup>36</sup> ) are inconsistently but significantly (at the 1% and 5% level respectively) associated with less and more rent extraction (Regression Models 1 and 2). Interestingly, the interaction term between the EDD/NEDD ratio and whether a country is not a high-income democracy is positive, and just statistically significant (at the 10% level), a result that suggests that in a non-high-income democracy context, a higher EDD/NEDD ratio is associated with more rent extraction (Regression Model 3). It is beyond the scope of this analysis to speculate as to why this may be. For example, it may be the case that some components of the EDD/NEDD ratio (inverse of government spending) may be associated with state capacity. Regardless of this, these results provide additional support for the theoretical model, as they clearly demonstrate that only within a context of a strong and stable electoral context (high-income democracy sub-set) does the EDD/NEDD ratio reduce the level of rent extraction.

_Table 1.05 The Individual Measures of Limited Government (EDD/NEDD Ratio) and Rent Extraction in NonHigh-Income Democracies_

||**Corrup**<br>**(1)**|**tion Perceptions Index (C**<br>**(2)**|**PI)**<br>**(3)**|
|---|---|---|---|
||<br>**(GLM)**|<br>**(GLM)**|<br>**(GLM)**|
||**Raw Score**|**Raw Score**|**Additive**|
|**EDD***<br>**Non-High-Inc Dem**|||0.51*<br>(0.26)|
|**Regulatory Density**|-7.65***<br>(2.01)|||
|**Small Govt**||3.32**<br>(1.48)||
|**EDD/NEDD Ratio**|||-0.33<br>(0.25)|
|**Non-High-Inc**<br>**Dem **|||0.78***<br>(0.32)<br>|
|**Basic**<br>**Controls**|√|√|√<br>|
|**Additional**<br>**Controls**|||√|
|**Sample**|Non-High-Income<br>Dem|Non-High-Income<br>Dem|All|
|**Number**<br>**of Observations**|22|22|52|
|**Log-Likelihood**|-9.34|-9.05|-19.91|

Note: robust standard errors in parentheses. Standard Control: Age of democracy, education attainment, latitude, (log) per capita income, and economic openness (long-term). Additional controls: Ethno-linguistic fragmentation, income inequality, (log) population, size of extractive industries, democratization (current), demographic dummy variables, economic openness (current), religious make-up variables, regional dummies (see Appendix A for details). * Significant at the 10% level, ** significant at the 5% level, ***significant at the 1% level. CPI score divided by 10 to aid interpretation. OLS results are -0.009 (0.0055); 0.19*** (0.06); 0.14* (0.081), for the interaction term-for models (1), (2) and (3) respectively. See Appendix A for details of variable descriptions. _Source: The Author_ Overall, the finding of the regression analysis suggests that in a high-income democracy context, consistent with the model, in which retrospective evaluation of incumbents is most likely to be feasible, a higher EDD/NEDD ratio is associated with less rent extraction, as the model introduced above and its antecedent

> 36 As membership of the EU is confined to high-income democracies in this dataset (Persson and Tabellini’s dataset and measures were developed before the 2004 enlargement of the EU) the non-EU component cannot be used, as no non-highincome democracy is a member and, therefore, there is no variation in this variable.

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