The Political Instability and their Impact on Economy in Sub Saharan African Countries
This paper explores the relationship between political instability and economic growth in Sub-Saharan African nations. A more comprehensive measure of political instability than has previously been developed is used in combination with a simultaneous equations model and dynamic panel estimation approach to produce several interesting inferences. First, the statistically significant inverse relationship between political instability and economic growth identified by earlier studies is confirmed by the estimates presented here. Second, the estimated system of equations indicates that economic growth and political instability are jointly endogenous. Third, in addition to the direct impact that political instability has upon growth, estimates confirm the hypothesis that political instability indirectly decreases economic growth by decreasing long-run capital accumulation. Fourth, failure to account for the dynamic nature of growth equations as well as the endogeneity of explanatory variables may produce biased effects of political instability on growth.
