Abstract
Sociopolitical instability severely affects economic growth in short and long run. This study analyzes that sociopolitical instability measured by proxy measure; annual growth rate of tourist arrivals in Sri Lanka during 1960-2005 adversely affects economic growth. Our empirical findings based on ordinary lease square econometric estimation, show that sociopolitical instability negatively and significantly affect economic growth. Reduction of economic growth rate (-0.032) due to the sociopolitical instability exceeds the improvement of economic growth (0.027) by increasing of physical capital accumulation. It also exceeds the improvement of economic growth (0.017) by increasing of human capital accumulation. Years which had more sociopolitical conflicts, violence within and between communities and war between government forces and Tamil tiger had lower economic growth than years which had peace talking between government and leaderships of minority, preparing political proposal for peace, effective peace or political agreements and none or less violence. Sociopolitical instability adversely affects economic growth in long runs with insignificant. Policy implications suggest that peace in Sri Lanka makes foundation for economic development based on economic growth. Sociopolitical stability plays major role in determination of economic growth.
Highlights
Empirical studies of economic growth in modern economic literatures pay more attention to sociopolitical causes rather than pure economic causes such as capital, labor and technology
Large differences in per capita income across the countries can not be explained by differences in across to the world’s stock of productive knowledge or by differences in quality of marketable human and physical capital or personal culture, the only remaining plausible explanation makes that great differences of wealth of nations caused by differences in the quality of their institutions and economic policies which make sociopolitical stability in their country[23]
Sociopolitical instability generated by sociopolitical factors in Sri Lanka plays key role in determination of short and long run economic growth than theoretical determinants
Summary
Empirical studies of economic growth in modern economic literatures pay more attention to sociopolitical causes rather than pure economic causes such as capital, labor and technology. Large differences in per capita income across the countries can not be explained by differences in across to the world’s stock of productive knowledge or by differences in quality of marketable human and physical capital or personal culture, the only remaining plausible explanation makes that great differences of wealth of nations caused by differences in the quality of their institutions and economic policies which make sociopolitical stability in their country[23]. It is clear that, in their preoccupation with growth and its stages and with the provision of capital and skills, theorists in economic growth have paid sufficient attention to sociopolitical stability made by institutional, sociopolitical, historical, cultural, and religious causes in the development process, in economic growth. According to the back ground of these studies focused on sociological causes for economic growth, this study hypotheses that sociopolitical instability caused by sociopolitical and historical causes in Sri Lanka adversely affects economic growth
Sign-in/Register to view highlights & summary 
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call