The Impact of Political Instability on the Economic Growth: An Empirical Analysis for the Case of Selected Arab Countries

Khadiga Elbargathi

doi:10.11648/j.ijber.20190801.13

Abstract

This study investigates the impact of political instability on the economic growth in Egypt, Jordan, Lebanon, and Tunisia for the period of 1996-2016. The study examines the existence of the long-run relationship between different five political indicators and the growth of the economy. The study utilized panel data analysis, using annual data covering the period of 1996-2016, for the four selected Arab countries. The empirical results of the study, using the Vector Error Correction Model (VECM), highlight the impact of different political instability indicators on economic growth. Moreover, these results indicate that there is a strong long-run relationship between the several political indicators upon the economic growth. More specifically, the results show that the control of the corruption and the rule of law indicators have the highest impact on the economic growth, while the regulatory quality has the lowest.

Highlights

The world in general constantly faces economic and political transpositions
Modern theories of political economy propose that political instability (PI) dominates the economics of many Arab countries, the presence of the fluctuating in the policy decisions and goals consider as poor indicator to the government of such a country; as it has been stated in the theoretical framework of the modernistic economy, as a result, this kind of unsecured government can be a cause of domestic troubles, which indirectly can influence the economic outcomes in the country through the linkage among the economic efficacy rates, and the current policies, in addition to the way of how the polity implement them [2]
We present the empirical portion of the study; where the data related to Egypt, Jordan, Lebanon, and Tunisia will be analyzed by conducting the necessary econometrics tests through Panel Cointegration Analysis

Summary

Introduction

Several economic cycles of Arab countries have witnessed satisfied movements, while others have remained poor and declined according to the huge numbers of their citizens. Modern theories of political economy propose that political instability (PI) dominates the economics of many Arab countries, the presence of the fluctuating in the policy decisions and goals consider as poor indicator to the government of such a country; as it has been stated in the theoretical framework of the modernistic economy, as a result, this kind of unsecured government can be a cause of domestic troubles, which indirectly can influence the economic outcomes in the country through the linkage among the economic efficacy rates, and the current policies, in addition to the way of how the polity implement them [2].

Objectives

Methods

Results

Conclusion