Political Instability As A Source Of Growth

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How Does Political Instability Affect Economic Growth?

How Does Political Instability Affect Economic Growth?
Author :
Publisher : International Monetary Fund
Total Pages : 30
Release :
ISBN-10 : 9781455211906
ISBN-13 : 1455211907
Rating : 4/5 (907 Downloads)

Book Synopsis How Does Political Instability Affect Economic Growth? by : Mr.Ari Aisen

Download or read book How Does Political Instability Affect Economic Growth? written by Mr.Ari Aisen and published by International Monetary Fund. This book was released on 2011-01-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this paper is to empirically determine the effects of political instability on economic growth. Using the system-GMM estimator for linear dynamic panel data models on a sample covering up to 169 countries, and 5-year periods from 1960 to 2004, we find that higher degrees of political instability are associated with lower growth rates of GDP per capita. Regarding the channels of transmission, we find that political instability adversely affects growth by lowering the rates of productivity growth and, to a smaller degree, physical and human capital accumulation. Finally, economic freedom and ethnic homogeneity are beneficial to growth, while democracy may have a small negative effect.


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This book addresses a puzzle in political economy: why is it that political instability does not necessarily translate into economic stagnation or collapse? In