This problem set is about corruption and ethnic fractionalization.

PART 1. Ethnicity, Corruption and Trust

Ethnically heterogeneous societies have higher perceived corruption levels. Using the attached main data set, do we see such a relationship between ethnic fragmentation and corruption? What about the relationship between ethnicity and trust? What are the mechanisms that govern the relationship between these variables? Discuss your results by giving references to academic literature or the reports produced by international organizations.

PART 2. GDP per capita and Size of the Government

1)Do we see any difference in the relationship between the size of the government a country and its GDP per capita for 1975 and 2009? If yes, what may be the reasons?

2)Wagner's Law states that as countries get richer, the size of the government expenditures also increase. Does our data set support this view?

PART 3. Latitude

The attached main data set has the data for "latitude", which is the distance of the country from the Ecuadorian line. The distance to Ecuadorian line can be a significant determinant in explaining development indicators. For this question, either by a simple correlation analysis or through regression analysis, analyze the effect of latitude on a variable of your interest and interpret your results.