How does political instability affect economic growth?

Ari Aisen and Francisco Veiga

European Journal of Political Economy, 2013, vol. 29, issue C, 151-167

Abstract: The purpose of this paper is to empirically determine the effects of political instability on economic growth. By 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.

Keywords: Economic growth; Political instability; Growth accounting; Productivity (search for similar items in EconPapers)
JEL-codes: O43 O47 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (291)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0176268012000675
Full text for ScienceDirect subscribers only

Related works:
Working Paper: How Does Political Instability Affect Economic Growth? (2011)
Working Paper: How does political instability affect economic growth? (2010)
Working Paper: How does political instability affect economic growth? (2010)
Working Paper: How does political instability affect economic growth? (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:29:y:2013:i:c:p:151-167

DOI: 10.1016/j.ejpoleco.2012.11.001

Access Statistics for this article

European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

More articles in European Journal of Political Economy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().