The United States (US) capitalism (C), democracy (D), rule of law (R) (CDR) economic model combines the degree of C, D and R associated with a particular state. In prior research, the CDR model was invented and computed for cross-country relationships. This paper computes a CDR model based on published US state C, rankings in D, and rankings in R, taking into account the effect of interactions between C, D and R. The CDR model explains per capita real gross state product (GSP) adjusted for purchasing power parity (GSPppp) with three policy variables namely C, D and R. Geographical latitude (L) is also significant. The model is referred to as the CDR model because C, D and R are policy variables that can be changed by policy makers, while geography is outside the control of policy makers.
References
[1]
Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail. Crown Publishers.
[2]
Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Chapter 6 Institutions as a Fundamental Cause of Long-Run Growth. Handbook of Economic Growth, 1, 385-472. https://doi.org/10.1016/s1574-0684(05)01006-3
[3]
Acemoglu, D., Naidu, S., Restrepro, P., & Robinson, J. (2014). Democracy Does Cause Growth, NBER Working Paper #20004 (pp. 1-64). National Bureau of Economic Research.
[4]
Akai, N., & Sakata, M. (2002). Fiscal Decentralization Contributes to Economic Growth: Evidence from State-Level Cross-Section Data for the United States. Journal of Urban Economics, 52, 93-108. https://doi.org/10.1016/s0094-1190(02)00018-9
[5]
Berzelius, J. J. (1835). Jöns Jacob Berzelius (1779-1848). Wikipedia. https://en.wikipedia.org/wiki/J%C3%B6ns_Jacob_Berzelius
[6]
Breusch, T. S., & Pagan, A. R. (1979). A Simple Test for Heteroscedasticity and Random Coefficient Variation. Econometrica, 47, 1287-1294. https://doi.org/10.2307/1911963
[7]
Caselli, F., Esquivel, G., & Lefort, F. (1996). Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics. Journal of Economic Growth, 1, 363-389. https://doi.org/10.1007/bf00141044
[8]
Cobb, C. W., & Douglas, P. H. (1928). A Theory of Production. The American Economic Review, 18, 139-165.
[9]
Cohen, A. J., & Harcourt, G. C. (2003). Retrospectives Whatever Happened to the Cambridge Capital Theory Controversies? Journal of Economic Perspectives, 17, 199-214. https://doi.org/10.1257/089533003321165010
[10]
Colacito, R., Hoffmann, B., & Phan, T. (2019). Temperature and Growth: A Panel Analysis of the United States. Journal of Money, Credit and Banking, 51, 313-368. https://doi.org/10.1111/jmcb.12574
[11]
Galor, O. (2011). Unified Growth Theory. Princeton University Press.
[12]
Gwartney, J. D., Holcombe, R. G., & Lawson, R. A. (2006). Institutions and the Impact of Investment on Growth. Kyklos, 59, 255-273. https://doi.org/10.1111/j.1467-6435.2006.00327.x
[13]
Hall, J. C., Lacombe, D. J., & Shaughnessy, T. M. (2019). Economic Freedom and Income Levels across U.S. States: A Spatial Panel Data Analysis. Contemporary Economic Policy, 37, 40-49. https://doi.org/10.1111/coep.12287
[14]
Hibbing, J. R., Smith, K. B. & Alford, J. R. (2014). Predisposed: Liberals, Conservatives, and the Biology of Political Differences. Routledge.
[15]
Islam, N. (1995). Growth Empirics: A Panel Data Approach. The Quarterly Journal of Economics, 110, 1127-1170. https://doi.org/10.2307/2946651
[16]
Jarque, C. M., & Bera, A. K. (1980). Efficient Tests for Normality, Homoscedasticity and Serial Independence of Regression Residuals. Economics Letters, 6, 255-259. https://doi.org/10.1016/0165-1765(80)90024-5
[17]
Jarque, C. M., & Bera, A. K. (1987). A Test for Normality of Observations and Regression Residuals. International Statistical Review/Revue Internationale de Statistique, 55, 163-172. https://doi.org/10.2307/1403192
[18]
Jones, C. I. (1995a). R & D-Based Models of Economic Growth. Journal of Political Economy, 103, 759-784. https://doi.org/10.1086/262002
[19]
Jones, C. I. (1995b). Time Series Tests of Endogenous Growth Models. The Quarterly Journal of Economics, 110, 495-525. https://doi.org/10.2307/2118448
[20]
Lee, L., & Ridley, A. D. (2024). Music and Collaboration: Implications for Gross Domestic Product. Journal of Quantitative Finance and Economics, 6, 225-242.
[21]
Lu, M. (2024). Racial Diversity by US State. https://www.visualcapitalist.com/the-most-diverse-states-in-the-us-by-race/
[22]
Malthus, T. R. (1798). An Essay on the Principle of Population. Pelican Books.
[23]
Mankiw, N. G., Romer, D., & Weil, D. N. (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics, 107, 407-437. https://doi.org/10.2307/2118477
[24]
North, D. C. (1991). Institutions. Journal of Economic Perspectives, 5, 97-112. https://doi.org/10.1257/jep.5.1.97
[25]
North, D. C., & Weingast, B. R. (1989). Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England. The Journal of Economic History, 49, 803-832. https://doi.org/10.1017/s0022050700009451
[26]
Olson, M. (1982). The Rise and Decline of Nations. Yale University Press.
[27]
Ramsey, J. B. (1969). Tests for Specification Errors in Classical Linear Least-Squares Regression Analysis. Journal of the Royal Statistical Society Series B: Statistical Methodology, 31, 350-371. https://doi.org/10.1111/j.2517-6161.1969.tb00796.x
[28]
Ramsey, J. B. (1974). Classical Model Selection through Specification Error Tests. In P. Zarembka (Ed.), Frontiers in Econometrics (pp. 13-47). Academic Press.
[29]
Randrup, N., Druckenmiller, D., & Briggs, R. O. (2016). Philosophy of Collaboration. In 2016 49th Hawaii International Conference on System Sciences (HICSS) (pp. 898-907). IEEE. https://doi.org/10.1109/hicss.2016.115
[30]
Ridley, A. D. (2020). Capitalism/Democracy/Rule of Law Interactions and Implications for Entrepreneurship and Per Capita Real Gross Domestic Product Adjusted for Purchasing Power Parity. Journal of the Knowledge Economy, 12, 384-411. https://doi.org/10.1007/s13132-020-00632-6
[31]
Ridley, A. D. (2022). Collaboration Trumps Intelligence as a Predictor of Standard of Living. Research in Applied Economics, 14, 1-16. https://doi.org/10.5296/rae.v14i2.19960
[32]
Ridley, A. D. (2023). The Mystery of Wealth. The Rule of Law Paradox. https://www.youtube.com/@DennisRidley
[33]
Ridley, A. D., & Korovyakovskaya, I. (2025). Collaboration Skills Recovery in Formerly Oppressed Communities: Reparations for Psychological Health Rehabilitation. Journal of Business & Economics Research, 18, 1-15.
[34]
Ridley, A. D., & Nelson, A. (2022a). Collaboration and Rule of Law. South East Asia Journal of Contemporary Business, Economics and Law, 26, 194-205.
[35]
Ridley, D., & Nelson, A. (2022b). The CDR Economic Impact of an Epigenetic Generational Psycho-Sequela in Formerly Oppressed Communities. Theoretical Economics Letters, 12, 1921-1957. https://doi.org/10.4236/tel.2022.126103
[36]
Ridley, A. D., Lee, L., & Nelson, A. (2023). Singapore and USA: Can Small and Large Countries alike Apply Collaboration to End Poverty? Journal of Quantitative Finance and Economics, 5, 217-242.
[37]
Ridley, D., & Ngnepieba, P. (2018). Conservation of Capital: Homeomorphic Mapping from Intangible Aggregate Macro-Economic CDR Space into Tangible Micro-Economic Production Spaces. Theoretical Economics Letters, 8, 2103-2115. https://doi.org/10.4236/tel.2018.811138
[38]
Rosier, K., Llaugel, F., & Ridley, D. (2024). A Corporate Managerial Framework for Collaboration Skills Training of Employees from Formerly Oppressed Communities. Journal of Applied Business and Economics, 26, 155-176. https://doi.org/10.33423/jabe.v26i3.7139
[39]
Rupasingha, A., Goetz, S. J., & Freshwater, D. (2002). Social and Institutional Factors as Determinants of Economic Growth: Evidence from the United States Counties. Papers in Regional Science, 81, 139-155. https://doi.org/10.1111/j.1435-5597.2002.tb01227.x
[40]
Sala-i-Martin, X., Doppelhofer, G., & Miller, R. I. (2004). Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach. American Economic Review, 94, 813-835. https://doi.org/10.1257/0002828042002570
[41]
Senna, C. (2013). Why the Industrial Revolution Happened Here. BBC. https://www.youtube.com/watch?v=UM2Aw4kmA0s
[42]
Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Tantor.
[43]
Solow, R. M. (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics, 70, 65-94. https://doi.org/10.2307/1884513
[44]
Solow, R. M. (1957). Technical Change and the Aggregate Production Function. The Review of Economics and Statistics, 39, 312-320. https://doi.org/10.2307/1926047
[45]
White, H. (1980). A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity. Econometrica, 48, 817-838. https://doi.org/10.2307/1912934
[46]
Yu, Y. (2010). Determinants of Variations in State Per Capita Personal Income: A Panel Data Approach. Applied Economics Letters, 17, 235-239. https://doi.org/10.1080/13504850701720213
