The second set of explanatory variables includes a number of control variables that
have been found to be important determinants of growth by previous studies. The
coefficient on the openness to trade variable (proxied by ratio of the sum of total
exports and imports to GDP) is expected to be positive. Government consumption
is expected to have a negative effect on growth. Similarly the black-market
exchange rate premium, which we use to proxy financial market distortions, is also
expected to negatively affect growth.