An Analysis of Improved Quality of Life and Enhanced Economic Performance Through the Maharishi Effect in New Zealand, Norway, USA, Cambodia, and Mozambique.
BY Guy David Hatchard Ph.D. and Kenneth Cavanaugh Ph.D.
Forward by Dr. David Leffler, Executive Director, Center for Advanced Military Science (CAMS)
Readers may recall my latest article in Vigilance Security Magazine on the topic of the paper below: “Embracing Invincible Defense Technology For Lasting Peace - A Better Idea: Invincible Defense Technology.” Invincible Defense Technology (IDT) involves large groups practicing in unison the non-religious Transcendental Meditation (TM) and advanced TM techniques that harness group brain power. This approach is scientifically verified by extensive peer-reviewed research. Field-tested means have demonstrated IDT defuses societal tensions by producing a coherent super-radiance field effect that affects the consciousness of all within proximity of the group, thereby creating orderliness and harmony.
This IDT paper below by Guy David Hatchard Ph.D. and Kenneth Cavanaugh Ph.D. was originally published in Canadian Centres for Teaching Peace. It is no longer available there, because this organization is now defunct. Vigilance Security Magazine has graciously agreed to reprint it in hopes that military-related leaders worldwide will read it, share it, and be inspired to take steps to immediately deploy IDT in their militaries.
Currently tensions between Russia and the US are at an all-time high, and are simultaneously rising between the US and other countries such as North Korea, Iran and China. This high level of international tension could rapidly escalate into global catastrophe for all sides. When properly applied IDT could quickly reduce these high tensions.
IDT has the potential to end all war and create lasting world peace - something we all so desperately need during these dangerous times of crises. This scientific research paper below adds further support that IDT can prevent social problems such as crime, war, terrorism and conflict.
The Peace and Well Being of Nations:
An Analysis of Improved Quality of Life and Enhanced Economic Performance Through the Maharishi Effect in New Zealand, Norway, USA, Cambodia, and Mozambique.
A Longitudinal, Cross-Country, Panel-Regression Analysis of the IMD Index of National Competitive Advantage
and
Contents
Abstract
Introduction
The Maharishi Effect:
The Maharishi Effect: previous research on crime and conflict:
Maharishi Effect national economic case studies: Cambodia, Mozambique, and USA:
The Maharishi Effect in developing nations:
Case Study: Mozambique has used Transcendental Meditation in the armed forces
Case Study: The Maharishi Effect in Cambodia
USA—economic and social research on the Maharishi Effect:
GDP growth rate in USA:
DATA
Maharishi Effect Data:
References
Abstract
The scores of New Zealand and Norway on the IMD Index of National Competitive Advantage increased significantly when they passed the Maharishi Effect threshold in 1993 (1% of a population practicing the Transcendental Meditation program or the √1% practicing the advanced TM-Sidhi program including Yogic Flying in a group) when compared to 44 other developed nations as shown by cross-country panel regression analysis robust to serially correlated errors, heteroskedasticity, and contemporaneous correlation of residuals (p < 3×10-15). Subsidiary analysis and OECD data confirmed that the changes were unusually broad-based (p < 6.5×10-8), sustained, and balanced in nature with five years of high growth, low unemployment, and low inflation. Case studies of the Maharishi Effect covering economic and social data from USA between 1983 and 1989, and Cambodia and Mozambique since the early 1990s indicate a similar picture of stable economic growth along with the capacity to repay government debt, improve quality of life and reduce conflict. Taken as a whole the findings suggest a prescription for balanced and sustained growth for both rich and poor nations along with a means to create and sustain a peaceful world.
Introduction
In 1989 the world appeared to be riding on the crest of a wave. The enmity between the super powers had dissolved. The global problems of conflict, starvation, and poverty seemed solvable in a new climate of cooperation between nations. The collapse of the Soviet Union in 1990 was followed by a global wave of democratization and free market economics that promised peace and prosperity. Yet alarmingly since we have witnessed the rise of new forms of conflict and terror, while famine and poverty have surged. Doctrines of unilateral military intervention have apparently failed to stem a rising tide of instability; many believe they are fueling it. The burning question of the day is ‘What policies and programs will guarantee peace and prosperity?’ This paper seeks to answer this question by examining five very different nations—an oil-rich country, two developing nations, one in Africa and one in SE Asia, a developed agricultural economy, and the world’s remaining ‘super power’. Each has been influenced by the Maharishi Effect, whose impact we assess by analyzing a broad-based international measure of economic performance and quality of life.
The Maharishi Effect:
Drawing on physical field theory, Maharishi Effect theory discusses a ‘field effect’ of consciousness (Hagelin 1987, Dillbeck et al 1987, 1988, Hatchard 2000 chap. 4), which brings about a phase transition from disorder to order in society. Phase transitions in the physical sciences are well understood as sudden decreases in entropy or disorder when a critical threshold is passed. Phase transitions are characterized by the emergence of new system properties such as the onset of superconductivity below a critical temperature. The model for such a transformation is that of a step function—rapid, broad-based inception of more orderly properties and functions of the system.
The Maharishi Effect is named after His Holiness Maharishi Mahesh Yogi who predicted it more than 40 years ago (Maharishi 1963). Over the last 35 years, 47 scientific research findings (M.U.M. 2004) have indicated strong empirical support for the Maharishi Effect, which increases positive trends and reduces problems in society when the critical threshold is passed of one per cent of a population practicing the Maharishi Transcendental MeditationSM 1 program or the square root of one per cent of a population practicing the advanced Transcendental Meditation® and TM-Sidhi® program including Yogic Flying in a group morning and evening. These technologies are ‘Technologies of Consciousness’ based on the ancient Vedic understanding of consciousness, which Maharishi has revived as Maharishi Vedic Science (Maharishi 1994).
The Transcendental Meditation program is an easy-to-learn, mental technique practiced fifteen to twenty minutes twice a day, which has become popular as a method to improve health and reduce stress. Over 5 million individuals have learned the technique worldwide. During the Transcendental Meditation program, the individual learns how to systematically allow thinking activity to settle down in a natural, effortless way and experience self-referral consciousness—Transcendental Consciousness. In more simple terms, it is a state of restful alertness: body metabolism corresponds to a deep state of rest and is the mind is fully awake, but free from thought activity. Over 600 research studies have shown that the individual becomes more alert, creative, intelligent, happy, and healthy when the technique is practiced regularly (M.U.M. 2004). According to Maharishi (1995, p. 308), the TM-Sidhi program including Yogic Flying is an advanced aspect of the Transcendental Meditation program. It teaches the individual to think and act from the level of self-referral consciousness, greatly enhancing coordination between mind and body. The first stage of Yogic Flying leads to a series of short hops accompanied by ‘bubbling bliss’ on the subjective level and maximum coherence in the brain on the objective level (Travis et al 1990).
The Maharishi Effect: previous research on crime and conflict:
Recently, a prospective, high-profile test of the Maharishi Effect appeared in Social Indicators Research (Hagelin et al. 1999). In the summer of 1993, 4,000 advanced Transcendental Meditation participants (Yogic Flyers) gathered in Washington DC for a six-week demonstration project. Predictions of reduced violent crime, improved approval ratings for government, and reduced need for emergency services were lodged in advance with a 27-member independent review panel and advertised in the Washington Post. The Washington Police Chief went on record to say that nothing short of a snow storm in July could reduce violent crime by the predicted 20%. In the event, the predictions were borne out (Hagelin et al. 1999, Goodman 1997), there was a 24% reduction in violent crime compared to the trend predicted by time series analysis of preceding data (p < 2×10-9), approval ratings for President Clinton increased (p < 6×10-8), accidents, emergency psychiatric calls, and hospital trauma cases decreased, and a quality-of-life index improved (p < 4×10-5).
Over thirty previous studies have shown reduced crime and violence through the Maharishi Effect since 1974. All of these studies are notably statistically significant (M.U.M. 2004). For example, Hatchard et al. (1996) found reduced crime in Metropolitan Merseyside, UK. Time series analysis of monthly data showed total crime fell 13.4% in March 1988 (p < 0.00006) when a permanent group of Yogic Flyers was formed. Within 5 years crime had fallen by 60% relative to national trends, leaving Merseyside with the lowest metropolitan crime rate in UK.
A Global Maharishi Effect is predicted whenever groups of 8,000 Yogic Flyers—the square root of one per cent of the world’s population—practice together (Maharishi 1995, p. 317). Using time series analysis Orme-Johnson et al. (1989) analyzed the effect on world events of three such assemblies held over two to three weeks in USA, Europe, and India. They found reductions in terrorism (−72%) and international conflict (−33%) as well as increased world stock prices. Orme- Johnson et al (1979) reported a simultaneous reduction in tension in five world trouble spots when groups of Yogic Flyers were sent to the countries in 1978. Davies (1989) identified seven periods when there were sufficient Yogic Flyers in groups to influence the violent conflict in Lebanon between 1983 and 1985 and used impact assessment analysis to show a rise in cooperation (+66%), and a drop in war intensity (−48%), fatalities (−71%), and injuries (−68%) in Lebanon at these times. The combined significance of all the indicators together is p < 9×10-20.
Maharishi Effect national economic case studies: Cambodia, Mozambique, and USA:
USA, Cambodia, and Mozambique have very different economies; the most powerful in the world, and formerly the two poorest. All three have had a measurable interest in the Transcendental Meditation program; in the USA through individual and corporate interest and in Mozambique and Cambodia through government support.
The Maharishi Effect in developing nations:
The authors undertook a general survey of political and economic statistics reviewed in Europa Yearbooks for all 193 of the world’s nations. Between 1990 and 1998 seventy nations changed their system of government to a multiparty democracy. Of these, thirty-three nations had no war either before or after the transition, while nine had a civil war both before and after. Twenty-six nations had no war prior but bloody civil conflict erupted soon after. Only three nations had a war before but peace afterwards—Cambodia, Mozambique, and Namibia2. Uniquely among those changing to democracy these three nations benefited directly from programs that Maharishi Mahesh Yogi proposed and implemented.
Cambodia and Mozambique have enjoyed sustained economic growth, rare among the developing nations, since implementing Maharishi’s Consciousness-Based approach. Elsewhere the switch to democracy has failed to deliver economic benefits. Per capita GNP in nations introducing multiparty democracy fell by 3.3% during 1990 to 1996, while the GNP of the rest of the world rose an average of 1.6%. Today, over 50 third world countries have less than 1/100 of the per capita income of the wealthiest nations. Formerly the poorest nations in the world, Cambodia and Mozambique have bucked the trend. Both countries have risen steadily up the world scale of relative economic prosperity as measured by GNP per head over the last decade (Cambodia by 24 places and Mozambique by 15 places).
In contrast, many countries that apparently had better prospects than Cambodia and Mozambique to progress in the 1990s, have failed dismally to capitalize on their opportunities. For example, in 1993 the Republic of the Congo had the advantage of much higher per capita income, greater natural resources, and a history less disrupted by war. However, a transition to democratic government supervised by the World Bank and began in 1993 gradually gave way to civil conflict. After the elections, factional fighting among elected parties eventually descended into civil war and the decade was characterized by political turmoil, civil conflict, and economic stagnation.
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Case Study: Mozambique has used Transcendental Meditation in the armed forces |
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In Mozambique, President Chissano, whose country was in the grip of a long-running civil war and economic chaos, decided at the start of the 1990s to introduce the Transcendental Meditation program to the armed forces and the people of his nation. By the end of 1992, about 15,000 people had learned the Transcendental Meditation technique and more than 3,000 people were trained in the TM-Sidhi program including Yogic Flying. After the introduction of the Transcendental Meditation program news went around the world about the transformation that the President had been able to effect in the destiny of his nation. For example, a report in the 22 February 1993 New York Times said: “Mozambique has unexpectedly emerged as a candidate for an African Success story —We have a combination of peace and rain which has not been seen in Mozambique for a quarter of a century’.” President Chissano attributes the cessation of civil conflict in Mozambique and the ensuing development of his country to the effect of the Transcendental Meditation program — “First I started the practice of Transcendental Meditation myself, then introduced the practice to my close family, then to my cabinet of ministers, then to my government officers, and then to the military. The result has been political peace and balance in Nature in my country … “ Mozambique has since experienced rapid economic revival with the country boosting GDP growth rate to 12.4% per year by 1997—the highest among all African nations, lowering inflation from 70% in 1994 to single digits by 1997, and reducing its massive net overseas debt from a peak in 1993 to a positive net asset in 1998. It has also successfully competed in the African market for manufacturing contracts, discovered the world’s largest deposits of titanium, and enjoyed the most stable African currency values over an extended period. This has all happened while President Chissano had a policy of utilizing the Maharishi Effect to boost national stability and economic development. Dr. Leffler’s Added Note: For more information, see also: War and Peace in Mozambique – A Time Line – After serious critical study and analysis of the research on Invincible Defense Technology, the Joint Chiefs of Staff of the Armed Forces of Mozambique implemented Invincible Defense Technology in different military units of their Ground, Naval and Air Forces. To better understand the ramifications of their decision and the results of the research by Dr. Hatchard and Dr. Cavanaugh see this timeline summary of Mozambique’s history since the 1960’s to the end of the 1990’s. Mozambique’s Prevention Wing Of The Military: End War, Improve The Economy – Article originally published in Africa Economic Analysis, Dr. David R. Leffler and Lee M. Leffler discuss the benefits gained from deployment of Invincible Defense Technology by the Mozambique Prevention Wing of the Military. Invincible Defense–A New “Secret Weapon!” – Article originally published Canadian Centres for Teaching Peace. Retired Navy SEAL officer and scientists describe the deployment of, and underlying theory behind, the Prevention Wing of the Military deployed by Mozambique military to end their civil war. For more information about the deployment of Invincible Defense Technology (IDT) by the military of Mozambique, please see this article by Steve Taylor Ph.D. in Psychology Today: “Can Meditation Change the World? The amazing story of the ‘meditating president.'” |
In Somalia, peace negotiations began in January 1993 under the auspices of the UN aimed at a transition to democracy and backed by the presence of 28,000 UN peacekeeping troops failed to lead to progress. The UN contingents were forced to withdraw and the country suffered civil conflict and fragmentation throughout the 1990s. In late January 1993, there were peace talks between the Angolan government and UNITA rebels in Addis Ababa with Portugal, Russia, and USA observing. A cease fire was signed during September 1993. Despite UN supervised efforts to implement the cease fire over a five-year period, by 1998 the country had again descended into full civil war and economic chaos prevailed. In contrast, the case studies of Cambodia and Mozambique are indicative of broad social and economic progress along with cessation of conflict. The authors are presently subjecting the limited available data to more rigorous study. Previous research in USA provides supporting data and analysis.
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Case Study: The Maharishi Effect in Cambodia |
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Maharishi Vedic University (MVU) Cambodia was established in 1992 as a joint venture between the Royal Cambodian Government, the Australian Aid to Cambodia Fund (AACF), and MVU Holland to provide a Consciousness-Based Education to rural youth who would not otherwise have access to higher education. By 2004, MVU Cambodia has grown to occupy four campuses with a total of over 1000 students. The unique feature of the education system is the daily group practice of the Transcendental Meditation technique and Yogic Flying. Cambodia has a population of 10 million. The group at MVU is therefore sufficiently large to pass the √1% Maharishi Effect threshold. Following 1993, Cambodia has undergone a remarkable transformation from a country with a civil war, martial law, a military dictatorship, no freedom of expressions or civil rights, a weak economy reliant on external assistance, poor relations with neighbors, and a prevailing sense of fear, intimidation and helplessness; to a democratic government with a restored monarchy, freedom of expression and civil rights, substantial foreign investment, greater self-sufficiency, much improved relations with neighbors, now a member of the ASEAN group of nations, and a much greater sense of confidence, security and optimism. In Cambodia prior to 1993, there were few reliable measures of social and economic factors available, but recorded trends show reduced inflation (Fig. 1) and average real GDP growth between 1994 and 2001 in excess of 5.5% p.a. Figure 1 Cambodia Reduced Inflation (Annual change in CPI mid year) 1990 – 2001
Since 1993, Cambodia has succeeded to a relatively significant extent in harmonizing conflicting groups and realizing a genuine base for social cooperative behavior, along with strong economic growth and relatively stable political institutions. Many MVU graduates now occupy leading roles in Cambodian society. In common with many political leaders, His Majesty King Norodom Sihanouk has publicly acknowledged that “MVU is playing an important role in human resource development and in restoration of peace and expansion of prosperity throughout the country.” The resolution of conflict, the emergence of cooperative behavior and the resurgence of economic activity is really the hallmark of the Maharishi Effect. Dr. Leffler’s Added Note: The group practice of the Transcendental Meditation® and TM-Sidhi® programs in Cambodia between 1993 and 2008 was associated with a 96.2% decline in sociopolitical violence in that war-torn country compared to violence in the preceding three years, according to a peer-reviewed study published in Studies in Asian Social Science in 2019. For more details see this summary in EurekAlert. |
USA—economic and social research on the Maharishi Effect:
Continuously between 1983 and 1989 inclusive and during specific other short periods a group of Yogic Flyers in Fairfield Iowa, USA at Maharishi University of Management was consistently larger than the square root of one per cent of the US population (approximately 1530 Yogic Flyers). Gelderloos et al (1988, 1990, 1996) used time series analysis and simultaneous transfer function models to analyze content of newspapers and public statements of US President Reagan. This showed that the size of the group of Yogic Flyers at Maharishi University of Management had a positive impact on US actions towards the USSR and vice versa, especially when the group size was large.
Stock market data can be interpreted as a measure of public confidence and optimism. Orme- Johnson et al (1987) and Cavanaugh et al (1984) used regression analysis and Box-Jenkins time series analysis respectively and found a simultaneous rise in the world’s major stock markets during the assembly of 8000 Yogic Flyers held at Maharishi University of Management, Iowa in December 1983 (p < 0.00004). The rise had not occurred at that time of year for a five-year previous period, nor did it occur in the control periods before and after the assembly. The assembly accounted for 27% of the variance in the World Index. Time series analysis that included 151 days prior and 60 days after the assembly explicitly allowed for the effect of long-term interest rates on international stock prices and found similar highly significant effects (p < 0.000033). Prior cyclical behavior of the World Stock Index did not predict any rise for the experimental period.
Orme-Johnson and Gelderloos (1988) measured the impact of participation in the Transcendental Meditation technique and Yogic Flying in the USA on a quality-of-life index including 12 social indicators. A reversal in the long-term decline in US quality of life occurred as large numbers of the USA population started the Transcendental Meditation program and accelerated when the Maharishi Effect threshold was exceeded. Cross-lagged correlations predicted enhanced quality of life from the Transcendental Meditation technique participation rate and showed this variable accounted for 44% of the variance (p < 0.0001). Regression analysis yielded a similar result (p < 0.0001). The economic portion of the index reported GNP per capita as rising 2.3% in 1983 marking the end of the recession, and a sharp decline in unemployment commencing in 1983.
In a series of studies covering 1979 to 1987 using Box-Jenkins time series analysis and multiple input transfer function analysis, Cavanaugh et al. (1987-89) found sizable and highly statistically significant reductions in the monthly “Misery Index” (the sum of inflation and unemployment rates) in both USA and Canada during and following times when the coherence creating group of Yogic Flyers at Maharishi University of Management exceeded the square root of one per cent of the population threshold. The effect was larger when the group size was larger, and more significant in the USA, the country where the group was located, than in neighboring Canada. The studies statistically controlled for intensity of aggregate supply and demand shocks, influence of business cycle fluctuations, monetary growth, and growth of crude materials prices (food, energy, etc.). The group of Yogic Flyers accounted for 54% of the reduction in the US Misery Index from its peak in 1980 (p < 1×10-8). A significant unidirectional effect of the Yogic Flying group on the Misery Index was also found (p < 0.025) indicating that Yogic Flying participation was a causal factor.
GDP growth rate in USA:
GDP growth rate in USA: The key measure of US economic health—annual Real GDP Growth Rate per capita enjoyed sustained growth during the period of high US Maharishi Effect coherence between 1983 and 1989. The highest rate of annual growth of the series (5.9%) is recorded in 1984 immediately following the assembly of 8,000 Yogic Flyers. All three factors cited by the 1990 OECD US Economic Survey (OECD 1989-2002) as underpinning the 1983 to 1989 growth of the US economy—reduced unemployment, increase in stock prices, and reduced inflation—have been reported by previous time series analysis to be significantly related to the number of Yogic Flyers.
Given this, it is a reasonable hypothesis that the growth of the US economy at that time was also related to the number of Yogic Flyers. However Gross Domestic Product is composed of a huge a variety of inputs. Due to the complexity of the mutual interactions and various lags between sectors of the economy, GDP is not a good candidate for analysis through the time series analysis process.
The detailed relationships in the quarterly figures at the various lags between the level of coherence and GDP will tend to get lost in the complexity and diversity of the input factors. Dillbeck and Rainforth (1996) confirm this view. Despite this, some support for this hypothesis is provided by the onset of sustained positive growth in US GDP in 1983 and by the large jump in GDP following the 8000 Assembly in 1984. The reduction in GDP growth rate in 1990 and the subsequent US involvement in international conflict as the size of the coherence group in Fairfield fell below the Maharishi Effect threshold after 1989 also supports this interpretation. This hypothesis would gain strength if there were other nations demonstrating similar effects.
DATA
The preceding case studies and previous research findings posed the authors an intriguing challenge—how to rigorously assess and quantify the impact of the Maharishi Effect on broad based measures of national economic performance? The opportunity to assess this was provided by the two developed countries enjoying the world’s highest levels of participation in the Transcendental Meditation program both of which passed the Maharishi Effect threshold during 1993.
Maharishi Effect Data:
Cumulative numbers of individuals instructed in the Transcendental Meditation technique in New Zealand were obtained by the authors from Maharishi Global Administration Through Natural Law (New Zealand). By the end of 1993, there were 35,593 persons instructed in the Maharishi Transcendental Meditation technique, 449 Yogic Flyers and 96 instructors of the Transcendental Meditation program. The population of New Zealand at the end of 1993 was 3,525,000 (New Zealand Government Census bulletins).
Among the 46 countries covered by IMD data, the only other country to have reached the target of one per cent instructed in the Maharishi Transcendental Meditation program during the period covered by the IMD rankings (1992 to 1998) was Norway. The baseline number instructed in Transcendental Meditation in Norway at 1st January 1988 was recorded as 37,000 to 38,000 with the extended range accounted for by a small recording error. Subsequently 2925 new individuals participated in the Transcendental Meditation program before the end of 1993. By this time there were over 400 Yogic Flyers some of whom practiced in groups generating sufficient additional coherence to pass the Maharishi Effect threshold. The population of Norway (OECD sources) was 4,287,000 in 1992.
New Zealand is a small, yet developed country. It is geographically distant from the world, yet its very smallness means that it must depend on exports and imports to maintain a well-mixed economic environment. Traditionally the New Zealand economy has depended on exports of primary products, particularly meat, wool, forestry, and dairy products, to pay for needed imports. However, its economy gradually declined between 1950 and 1990, with attendant relative falls in standard of living as compared to its major trading partners. Repeated interventions of successive governments to correct the obvious imbalances in the persistently sluggish economy had failed to produce a sustainable model of economic success. But by 1994, it was apparent that a renewed vibrancy had taken hold of the whole economy and the national mood.
Norway has an oil-rich economy, but despite the attendant wealth, the economy underperformed in the 1980’s. Low domestic demand became linked with rising unemployment and a high rate of corporate failure, which affected bank solvency. By 1994, it was clear that domestic demand had unexpectedly began to increase ushering in an extended period of growth.
Measures of economic well-being of nations:
Michael Porter’s analysis of “The Competitive Advantage of Nations” (1990) has been adapted and augmented in econometric approaches to measuring the economic well-being of nations. The IMD Index contained in the IMD World Competitiveness Yearbook (IMD 1987-98) is used in this study. It is a measure and database of the relative national economic health of industrially developed nations that has drawn upon Porter’s ideas, but its broad base ensures that it is independent of any particular theory. Madeleine Linard de Guertechin defines the IMD Index in the 1997 World Competitiveness Yearbook as a multidimensional approach “to capture in a single index the capacity of a country’s economic structure to promote growth”. The IMD Index is used to test the hypothesis that the economy of both New Zealand and Norway showed a significant and broad-based improvement in IMD scores relative to other developed nations at the time when they surpassed the 1% threshold of individuals instructed in the Transcendental Meditation program in 1993. The main conclusions of the analysis are also checked against the conclusions of the independently compiled OECD Economic Surveys.
Sources: The IMD Yearbook has been published annually since 1987 by IMD, the International Institute for Management Development in Switzerland. It contains a data base of economic and social measures from industrially developed nations, which in 1996 comprised 224 data inputs for each of 46 nations. The 224 data points data are combined through addition of z scores into 41 subscales, which are in turn grouped into 8 categories3 and finally combined into one overall competitiveness performance index (See Fig. 2) yielding an annual ranking of the 46 countries.
Email communication with IMD indicated that the Index has been compiled from 1992 to 1998 using a consistent methodology. This new methodology was first used in 1996. At that time, the new method was retrospectively applied to update the IMD Index for years 1992 – 1995.
Figure 2
OVERALL IMD SCORE
The data sources are made up of 35.5% that are per capita statistics unrelated to country size such as interest rates or international credit ratings, 10.7% absolute values that are positively affected by the size of the country, 11.6% growth rates, 33.3% executive surveys, and 8.9% background information. The IMD Yearbooks rank the 46 countries on each set of the 224 raw data inputs (excluding the background statistics). Each data set is then converted into z scores through the standard procedure.
Two thirds of the data sources involve hard or measured facts drawn from a wide variety of international and national sources. Data sources are referenced, missing values (2.9%) are handled efficiently, and data issues of reliability and comparability are discussed in footnotes and appendices. The remaining one third of the data series are derived from up-to-date surveys of senior executives from the 46 countries. For example in late 1995, a 72 question survey was sent out to 21,000 businessmen of whom 3,162 responded. This data was used in the 1996 IMD Yearbook analysis. A similar procedure has been used in every other year.
The IMD Yearbooks report raw values for the data inputs, but all compiled subscales and categories are quoted solely as rankings of nations. The country with the best performance being ranked number 1 and so on. To avoid this dilution of data, the authors obtained the series of compiled z scores for the overall Index from IMD (See Table 1) and used it in the main analysis. The effects of minor recorded data irregularities are discussed and their correction estimated in the subsidiary analysis,
PRIMARY ANALYSIS
The dependent variable is the IMD Index data (Table 1), which is a repeated measure where each of 46 countries is observed at seven yearly intervals in order to calculate a numerical value for overall international competitiveness. Since the overall IMD Index score is constructed from the addition of z scores, the mean of each year is necessarily zero. Although the scores can in theory take any value, in practice, no country moved outside limits of ±200. The standard deviation of the IMD Index scores increased between 1992, when it was sixty-three, to seventy-two in 1998.
Table 1: IMD Index of National Economic Well Being
Overall Scores 1992 – 1998* (compiled z scores)
|
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
|
|
ARGENTINA |
-51.21 |
-27.26 |
-50.35 |
-34.55 |
-42.3 |
-33.69 |
-30.95 |
|
AUSTRALIA |
41.85 |
31.54 |
29.64 |
39.88 |
39.39 |
22.28 |
21.36 |
|
AUSTRIA |
9.17 |
28.12 |
40.38 |
46.05 |
48.47 |
40.68 |
40.15 |
|
BELGIUM |
8.14 |
15.65 |
36.66 |
30.27 |
37.1 |
41.31 |
37.48 |
|
BRAZIL |
-65.33 |
-52.9 |
-67.45 |
-65.83 |
-91.66 |
-97.27 |
-92.36 |
|
CANADA |
66.25 |
64.43 |
59.22 |
41.77 |
25.31 |
29.31 |
31.41 |
|
CHILE |
-1.52 |
8.03 |
48.2 |
31.16 |
14.04 |
27.3 |
24.93 |
|
CHINA |
1.71 |
-21.02 |
-15.28 |
-36.27 |
-47.41 |
-54.15 |
-57.6 |
|
COLOMBIA |
-102.68 |
-101.78 |
-53.43 |
-51.03 |
-49.13 |
-39.31 |
-39.22 |
|
CZECH REPUBLIC |
-66.77 |
-54.81 |
-53.47 |
-70.81 |
-68.6 |
-55.01 |
-58.44 |
|
DENMARK |
69.49 |
67.99 |
69.43 |
64.52 |
72.26 |
75.38 |
72.15 |
|
FINLAND |
78.34 |
75.35 |
44.15 |
36.58 |
26.27 |
5.59 |
16.28 |
|
FRANCE |
17.69 |
30.75 |
30.23 |
36.18 |
45.6 |
34.86 |
32.17 |
|
GERMANY |
45.5 |
52.57 |
62.25 |
70.31 |
80.07 |
82.59 |
83.47 |
|
GREECE |
-63.05 |
-59.71 |
-75.12 |
-78.65 |
-69.22 |
-68.46 |
-65.91 |
|
HONG KONG |
89.65 |
89.02 |
86.64 |
93.55 |
95 |
95.27 |
90.69 |
|
HUNGARY |
-30.57 |
-56.31 |
-71.88 |
-86.27 |
-77.25 |
-60.48 |
-60.36 |
|
ICELAND |
27.54 |
19.39 |
18.38 |
8.68 |
10.14 |
11.16 |
9.33 |
|
INDIA |
-82.64 |
-93.23 |
-69.27 |
-61.14 |
-66.95 |
-76.61 |
-76.35 |
|
INDONESIA |
-75.05 |
-75.2 |
-75.78 |
-54.46 |
-56 |
-59.7 |
-57.97 |
|
IRELAND |
62.87 |
48.4 |
28.53 |
21.02 |
22.72 |
14.41 |
13.21 |
|
ISRAEL |
-0.56 |
-6.38 |
19.91 |
12.14 |
14.64 |
18.49 |
14.39 |
|
ITALY |
-40.31 |
-54.24 |
-32.9 |
-32.99 |
-31.72 |
-28.46 |
-27.33 |
|
JAPAN |
35.31 |
67.83 |
81.29 |
90.14 |
104.43 |
118.35 |
111.59 |
|
KOREA |
-62.47 |
-33.4 |
-21.22 |
-6.07 |
-41.18 |
-30.35 |
-32.51 |
|
LUXEMBOURG |
68.29 |
59.57 |
62.8 |
39.61 |
42.26 |
47.43 |
46.95 |
|
MALAYSIA |
18.08 |
32.54 |
23.36 |
16.88 |
32.11 |
37.72 |
33.52 |
|
MEXICO |
-62.27 |
-76.57 |
-82.18 |
-88.5 |
-38.17 |
-46.1 |
-46.99 |
|
NETHERLANDS |
83.62 |
73.49 |
63.15 |
63.2 |
58.46 |
58.03 |
59.65 |
|
NEW ZEALAND |
47.56 |
58.73 |
60.53 |
62.27 |
51.84 |
27.95 |
28.15 |
|
NORWAY |
72.73 |
74.66 |
68.17 |
52.42 |
46.44 |
19.97 |
15.9 |
|
PHILIPPINES |
-54.33 |
-40.84 |
-41.8 |
-59.77 |
-59.56 |
-53.13 |
-44.58 |
|
POLAND |
-105.54 |
-108.77 |
-86.97 |
-107.37 |
-114.9 |
-110.9 |
-112.32 |
|
PORTUGAL |
-36.83 |
-52.62 |
-60.2 |
-42.62 |
-38.51 |
-42.77 |
-39.2 |
|
RUSSIA |
-133.41 |
-160.64 |
-179.28 |
-182.09 |
-179.59 |
-156.91 |
-140.44 |
|
SINGAPORE |
141.39 |
135.35 |
119.06 |
120.94 |
106.4 |
116.97 |
113.14 |
|
SOUTH AFRICA |
-100.84 |
-110.36 |
-100.18 |
-91.67 |
-84.84 |
-84.2 |
-80.67 |
|
SPAIN |
-10.34 |
-3.74 |
-35.12 |
-26.59 |
-27.47 |
-36.42 |
-37.3 |
|
SWEDEN |
36.65 |
35.01 |
45.21 |
44.14 |
56.47 |
47.57 |
45.76 |
|
SWITZERLAND |
69.7 |
71.74 |
62.76 |
81.42 |
83.25 |
73.03 |
71.01 |
|
TAIWAN |
38.64 |
15.59 |
33.08 |
41.74 |
18.93 |
45.05 |
43.71 |
|
THAILAND |
-71.19 |
-32.61 |
-35.37 |
-13.96 |
-7.86 |
-15.86 |
-15.18 |
|
TURKEY |
-61.35 |
-61.01 |
-55.63 |
-54.52 |
-38.84 |
-52.2 |
-50.53 |
|
UNITED KINGDOM |
52.93 |
62.64 |
31.37 |
41.23 |
43.06 |
30.58 |
33.29 |
|
USA |
196.02 |
180.05 |
155.68 |
164.43 |
153.42 |
145.7 |
139.11 |
|
VENEZUELA |
-100.87 |
-115.06 |
-117.2 |
-105.34 |
-96.93 |
-64.97 |
-62.62 |
*Publication date is May of that year; scores compiled from the previous year’s data.
Maharishi Effect theory predicts a phase transition in economic performance as the 1% threshold is passed. Visual inspection of Table 1 shows that both New Zealand and Norway increased their IMD scores by approximately 25 at the time when the Maharishi Effect threshold was surpassed during 1993. To assess the statistical significance of this improved performance, the main analysis should analyze the behavior of the panel of data as a whole. Importantly, it should ensure that any statistical threats to inference such as serial correlation or heteroskedasticity of the residuals are diagnosed and properly handled. The increase in standard deviation between cross-sections suggests that cross sectional heteroskedasticity should be checked. Visual inspection of Table 1 indicates some volatility in individual country scores from year-to-year, which suggests that heteroskedasticity should also be investigated in a group-wise sense. This volatility should also be visually examined and investigated on a case-by-case basis. Above all, the model should be both a good fit and demonstrably robust.
New Zealand and Norway both surpassed the Maharishi Effect Threshold (1% of the population for the Maharishi Transcendental Meditation technique combined with √1% for groups of Yogic Flyers) during 1993. The target reporting date for the 1994 IMD Index data is mid-1993.
Therefore, in accord with previous practice, the independent variable or Maharishi Effect Index was modeled as step function—zero for every country except Norway and New Zealand in the years 1994, 1995, 1996, 1997, and 1998 when it was assigned the value one. This follows established practice where the Maharishi Effect is described as a phase transition phenomenon, which can be understood and analyzed in the same way as transitions in physical systems (Hatchard et al. 1996).
STATISTICAL METHODS
Annual IMD index ratings for 46 countries formed a longitudinal panel of data for the years 1992 through 1998. The cross-country panel data were analyzed using dynamic panel regression methods.
A “fixed-effect” panel regression model for the IMD index was formulated and then estimated using a procedure for cross-country data proposed by Beck and Katz (1995). In this fixed-effect model (FEM), the annual value of the IMD index for each country was modeled as a linear function of three terms: (1) a country-specific regression intercept (fixed effect) that provided an estimate of the mean of the index for each country; (2) a regression coefficient designed to estimate a hypothesized shift in the mean of the index for New Zealand and Norway due to the Maharishi Effect; and (3) a random error or disturbance term4. Each of the resulting set of regression equations for the 46 countries had following simple form:
IMDit = βoi + β1 MEit + εit , i = 1, 2, …, G; t = 1, 2, …, T (1)
In these equations IMDit is the IMD index for country i in year t, G is the number of countries in the sample (46) and T is the number of annual observations for each country (seven). The coefficient βoi is a regression intercept or constant term that differs across countries. The Maharishi Effect variable MEit is a “step-function” binary variable that takes the value 1 for the years 1994 through 1998 for New Zealand and Norway and is equal to 0 for all other countries and time periods. The parameter β1 is a regression coefficient that estimates the impact of the Maharishi Effect on the mean of the index for Norway and New Zealand. Finally, εit is a random error or regression disturbance term with mean zero.5
The parameters of the panel regression model were estimated using a method suggested by Beck and Katz (1995, 1996). The Beck and Katz approach allows for possibly differing variance of regression errors across countries (“panel heteroskedasticity”), contemporaneous correlation of errors across countries, and possible serial correlation of residual errors. The latter three properties of the regression errors are common in the analysis of cross-country data (Beck and Katz, 1995). In the presence of any of the above three properties of the regression errors, ordinary least squares (OLS) regression will not be optimal (Beck and Katz, 1995, 1996).6 In this case the OLS estimates of the regression parameters will be inefficient, although they are unbiased and consistent (Beck and Katz, 1995; Greene, 2000, ch. 11). More importantly, in this case the estimated standard errors for the regression coefficients will be incorrect (biased and inconsistent) even in large samples, thus invalidating standard tests of hypotheses (e.g., t-tests and F-tests) (Greene, 2000, ch. 11-12; Beck and Katz, 1995, 1996). The method of Beck and Katz generates correct standard errors for the purpose of hypothesis testing, so-called “panel corrected standard errors” (PCSE).
The Beck-Katz Approach:
The first step in the Beck-Katz approach was to estimate the fixed effect model (1) using OLS regression. If diagnostic tests indicated the presence of significant first-order serial correlation of the regression residuals, the Prais-Winsten transformation of the data was used to eliminate the observed serial correlation (Kmenta, 1986, p. 619). The equation was then re-estimated by OLS using the transformed data.
As recommended by Beck and Katz (1995) on the basis of Monte Carlo simulation experiments, the Prais-Winsten transformation was based on a common estimated serial correlation coefficient, rather than separate coefficients for each country. The resulting regression estimates based on the transformed data are equivalent to those produced by feasible generalized least squares (FGLS) estimation of a regression model with a first-order autoregressive (AR(1)) model for the errors (Greene, 2000, p. 546).
An advantage of the Prais-Winsten approach is that, in contrast to the Cochran-Orcutt transformation, it does not involve discarding the first data observation for each country, leading to increased efficiency of the resulting OLS estimates (Greene, 2000, pp. 546 547). Since only 7 annual observations were available for the IMD index for the 46 countries, retaining the first observation was an important consideration. This issue was particularly salient for tests of the Maharishi Effect because only two annual values of the index were available for the baseline period prior to the predicted onset of the Maharishi Effect for New Zealand and Norway in 1993 (as reflected in the IMD index data for 1994).
After removing the serial correlation of residuals in the first step of the Beck-Katz procedure, the OLS estimates of the regression slope parameters for the fixed-effect model (1) will be unbiased and consistent. However, the estimated standard errors for the parameter estimates will still be incorrect (biased and inconsistent) if the regression errors display either differing error variance across countries, cross-country correlation of the errors, or both. Because the OLS parameter estimates will be correct after any serial correlation of the errors has been removed, Beck and Katz propose basing hypothesis tests on the OLS parameter estimates of the transformed data from step one using corrected standard errors (PCSEs).7
Beck and Katz (1996) prove that the resulting PCSEs are consistent. Simulation experiments (Beck and Katz, 1995, 1996) indicate that in typical cross-country studies the corrected standard errors will be accurate even in the presence of contemporaneously correlated (panel heteroskedastic) errors. Their simulations also suggest that the efficiency loss of using the OLS parameter estimates “would not be large in practical research situations” (Beck and Katz, 1996, p. 5).
In summary, the specification of the independent Maharishi Effect variable as a step function enables the panel regression model to provide an “impact assessment” of the Maharishi Effect intervention on the mean level of the IMD Index for Norway and New Zealand allowing for a common autoregressive error structure as well as a contemporaneous correlation of errors and differing error variance across countries. With this approach, the analysis will answer the question ‘Is a significant increase in competitiveness score predicted by the increase in coherence, taking into account the time-dependent, dynamic structure of the IMD panel of scores?’
RESULTS OF PRIMARY ANALYSIS
The primary analysis employs panel regression analysis to determine the significance of the increases in the level of the IMD Index for the 1994-1998 as compared with the 1992-93 baseline period. The dependent variable for the analysis was the annual value of the IMD index (compiled z scores) for the full set of 46 countries ranked by the IMD over the years 1992-1998. The sample included seven annual observations for each of the 46 countries, giving a total of 322 observations. There were no missing data values. The regression results for the primary panel data analysis of the IMD index are summarized in Tables 2 and 3. Results were calculated using LIMDEP 7.0 and EViews 3.1 for Windows.
Table 2 displays the initial ordinary least squares (OLS) regression parameter estimates for the fixed-effects model (FEM) described in equation (1). As hypothesized, the sign of the estimated impact of the Maharishi Effect on the IMD index for New Zealand and Norway was positive. The estimate of the Maharishi Effect parameter β1 indicated an upward shift of 36.545 in the mean level of the IMD index for the two countries, on average, for the years 1994 through the end of the sample in 1998 (p = 3.3 x 10-5, two tailed test).
As shown in Table 2, the overall F statistic for the regression was statistically significant, indicating that the parameter estimates for all explanatory variables in the regression take together, including the estimated regression intercepts for each country, were significantly different from zero. In order to conserve space, the estimated country-specific intercepts are not shown in Tables 2 and 3 (Complete regression results are available upon request from the first author). The reported Rsquared value for the regression implies that the estimated model accounted for 96.1 percent of the variation in the IMD index.
Diagnostic tests reported in Table 2 indicate violation of important assumptions underlying the OLS regression analysis. First, the Lagrange multiplier (LM) test for first-order serial correlation of the regression residuals was statistically significant, with an estimated serial correlation coefficient of 0.388. The latter test is the Breusch-Godfrey test for first-order serial correlation (Godfrey, 1988; Greene, 2000, p. 541). Second, the LM test for differing variances for the regression errors across countries was highly significant (Greene, 2000, pp. 594-596), indicating violation of the OLS assumption of constant variance of the regression disturbances. Third, inspection of the (contemporaneous) correlation matrix of the regression residuals indicated substantial cross-country correlation of the errors, with a majority of the correlations varying from 0.5 to 0.9 in absolute value. As in Beck and Katz (1995, 1996) no formal test was employed because the cross-country correlations are imprecisely estimated.8
As described above, in the presence of any of these three violations of the standard OLS error assumptions, the standard errors for the estimated parameters will be incorrect (biased and inconsistent), thus invalidating hypothesis tests for the estimated parameters. Consequently, in order to perform valid hypothesis tests the Beck-Katz procedure (Beck and Katz, 1995; Greene, 2000, ch. 15) was used to correct the OLS standard errors reported in Table 2.
Table 2
Panel Regression Analysis of IMD Index, 1992-1998
Ordinary Least Squares (OLS) Regression Estimates of Fixed Effects Model
Dependent Variable: IMD Index (Compiled Z Scores)†
|
Variable |
Coefficient |
Standard Error |
T-Ratio |
P Value |
|
Maharishi Effect |
36.545 |
8.655 |
4.223 |
3.3 x 10--5 |
|
Number of observations 322 |
Degrees of freedom 275 |
|
F-statistic F(46, 275) 145.48 (p = 0.000) |
R-squared 0.961 |
|
S.E. of regression 14.629 |
R-bar-squared 0.954 |
|
Sum of squared residuals 58852.80 |
S.D. of dependent variable 68.153 |
|
Lag-one serial correlation 0.388 |
Mean of dependent variable -2.07 x 10-12 |
|
Durbin-Watson statistic 1.119 |
Akaike information criterion 2684.85 |
Diagnostic Tests:
|
LM test for serial correlation:2(1) = 70.574 (p = 0.000) |
LM test for panel heteroscedasticity:2(45) = 146.7808 (p = 0.000) |
|
Test of pooled regression vs. fixed effects: F(45, 275) = 144.913 (p = 0.000) |
Jarque-Bera test for normality:2(2) = 12.845 (p = 0.002) |
† The dependent variable was the net improvement in year-to-year net subscale ranks (transformed to z-scores) for the IMD Index. The data consisted of 4 annual observations (T = 4) on each of 36 countries (G = 36) with complete data, yielding a total sample of 144 observations.
Correction for Violations of the OLS Error Assumptions:
In the Beck-Katz procedure, all regression variables for the fixed-effects model were first transformed to eliminate the serial correlation of residuals and then the model was re-estimated by OLS. The resulting estimates are shown in the top panel of Table 3. After adjusting parameter estimates for residual serial correlation, panel-corrected standard errors were calculated to provide estimated standard errors that are robust to panel heteroskedasticity and contemporaneous correlation of the residuals. The calculation of the PCSEs provides corrected estimates of the OLS standard errors, but does not alter the OLS parameter estimates that have been adjusted for serial correlation. Nor does the adjustment process for the standard errors change the summary and diagnostic statistics for the regression. The resulting corrected standard errors (PCSEs) are reported in the lower panel of Table 3.
Table 3
Corrected Panel Regression Analysis of IMD Index, 1992-1998
OLS Regression Estimates Corrected for Serial Correlation with Standard Errors Robust to Panel Heteroskedasticity, and Cross-Country Correlation of Residuals
Dependent Variable: IMD Index (Compiled Z Scores)†
OLS Estimates Corrected for Residual Serial Correlation:
|
Variable |
Coefficient |
Standard Error |
T-Ratio |
P Value |
|
Maharishi Effect |
43.023 |
11.890 |
3.618 |
0.0004 |
OLS Estimates Corrected for Serial Correlation with Standard Errors Robust to Panel Heteroskedasticity and Cross-Country Residual Correlation:
|
Variable† |
Coefficient |
Panel Corrected Standard Error |
T-Ratio |