Abstract
This study investigates the effects of various factors of political instability on economic growth in selected ten Asian economies during 1990-2005. Our empirical findings show a close relationship between political stability and economic growth. We have analyzed the data by using ordinary least squire econometrics methods, which conclude that 32.35 scores increasing of index of political stability leads to one percent increase in economic growth. From these finding based on Asia experiences, we can conjecture that political stability plays a dominant role in determination of economic growth and sources of capital accumulation. This study uses the average proportion methods and Tinbergen diagrams to show the relative importance of political stability than economic freedom to accumulate capital, measured by four sources of capital accumulation which are proximate causes for economic growth. The results also clearly show that the role of political stability in accelerating economic growth is more vital than economic freedom.
Highlights
Economic growth contributes for economic development as root for tree
Many studies have identified various sources of rapid growth in those economies such as human capital accumulation, physical capital accumulation, technology improvement, foreign trade, foreign trade investment and attitudes of people. Even all those factors positively contributed to economic growth, all of them directly and indirectly depend on political stability which those economies had during their period of development
We evaluate the effect of political and economic freedom on varies sources of capital accumulation. (Physical and human) It shows the indirect effect of political stability on economic growth
Summary
Economic growth contributes for economic development as root for tree. Why most of developing countries are unable to enjoy rapid growth? In Asia, rapid economic growth of newly industrial countries (Singapore, Taiwan, South Korea and Kong Hong), Malaysia and recently china has attracted the world. Many studies have identified various sources of rapid growth in those economies such as human capital accumulation, physical capital accumulation, technology improvement, foreign trade, foreign trade investment and attitudes of people Even all those factors positively contributed to economic growth, all of them directly and indirectly depend on political stability which those economies had during their period of development. Greater democracy is thought to hinder growth of China and India All these studies focus on growth by raising the pressure for immediate the economic factors that determine economic growth consumption, which reduces investment. Instability include political assassinations, violent we will analyze the political factors that deaths, coups, revolutions, and political riots, indices of caused the rapid economic growth in China and India executive adjustments, major constitutional changes, during the period of economic reforms and compare and major government crises excluding revolts, them. Longevity of ruling authority in a country: that ruling authority may be a single party in a one party dominant system or in an authoritarian regime or under military
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