Consistency Principle: Theory and Empirical Evidence

Abstract

The article verifies one of the principles of the general theory of social development, which is called the principle of consistency. According to this principle, the economic growth rate positively depends not only upon the level of technological development, institutions, and culture, but also upon the degree of consistency between these factors. This hypothesis was tested by constructing econometric models on a sample of 154 countries. The output variable is the rate of GDP growth, and the explanatory factors are technology, institutions, and culture. To quantify the latter, the corresponding proxy variables were used: labor productivity, the Doing Business index, and the Corruption Perceptions Index. The constructed models are fixed-effect models, and the coefficients of the explanatory variables are determined by adjusting the variance-covariance matrices. Empirical evidence has confirmed the validity of the principle of consistency for the group of “rich” countries with upper middle income, and have not been confirmed for the group of “poor” countries with lower middle income. The obtained result was interpreted in terms of the concept of a narrow corridor called Acemoglu–Robinson, the concept of structural competition and the theory of self-organization. It is shown that the consistency principle acts as a necessary condition for the appearance of the Red Queen effect in the Acemoglu–Robinson concept.