Impact of Political Stability on Economic Development

Impact of Political Stability on Economic Development

The main theme of this study is chosen in response to the general consensus on the importance of conducting a comprehensive study that may shape the economic policies and promote the business sector as well as the government and other ...

Author: Addis Ababa Othow Akongdit

Publisher: Christian Faith Publishing, Inc.

ISBN: 9781645692478

Category: Business & Economics

Page: 284

View: 687

The main theme of this study is chosen in response to the general consensus on the importance of conducting a comprehensive study that may shape the economic policies and promote the business sector as well as the government and other organizations. However, the key question posed by this study is whether the theory that political stability fosters economic development is simply the wishful thinking of people who value both stability and growth or whether it is a delusion of those who believe that most developing countries may enjoy rapid growth if they are stable. The importance of this study is clear: South Sudan is confronted with enormous challenges of administrative, ethnic, political, and economic development. In light of this, the current study addresses the following issues: "What is the impact of the political system in South Sudan on economic development? What is the impact of oil resources on sustainable development? What is the impact of the oil shutdown on political and economic stability, and what is the possibility of deficit financing? Is there any possibility for cooperation between Sudan and South Sudan?" In this context, the major objective of this study is to analyze the political development of the country to verify that political stability fosters the achievement of economic and social development. It also seeks to analyse the political history of Sudan in general and South Sudan in particular, emphasising the importance of political stability, among other considerations, as a precondition for socioeconomic development. Furthermore, other objectives of the study include suggestions on how political stability could be ensured in South Sudan and how good governance may promote political and economic stability. In light of the above, this study focuses on the issues of the political transition and policies that will improve the economic, political, and social well-being of the people of South Sudan. It seeks ways of setting up policies that will raise the standard of living of people with sustained growth and move from a simple, low-income economy to a modern, high-income economy. It also attempts to develop a framework for cooperation between Sudan and South Sudan. The methodology that is adopted to address these issues is collecting, sorting, and analysing primary and secondary information relating to the history of political and economic development in South Sudan, using empirical approaches such as SWOT analysis, information sources, references, and books. However, this study is organized as follows: chapter 1 discusses political stability and economic development in a theoretical framework through which we explore the empirical analysis; it is divided into four sections. Section 1 focuses on definition, causes, and measurement of political stability with an aim to assess the effect of political stability on growth-related variables. In section 2, we define the concept of political instability and measure it by using indicators like the number of coups d'état, the number of major government crises, the number of cabinet changes, and the number of political revolutions as well as political assassinations. Section 3 discusses the concept and definition of economic development and summarizes the major theories of economic development in five fundamental elements. The last section explores the implications of financing economic development by discussing domestic resources (including deficit financing) and foreign financial resources and the role of each of them in achieving economic development. Chapter 2 presents the political and social background of South Sudan is divided into three sections. Section 1 discusses South Sudan's ability to function and successfully implement its policies and strategic vision for the year 2040. Section 2 focuses on the demographic structure of South Sudan in terms of population, education, languages, and culture. Section 3 discusses the social indicators such as infrastructure, poverty, and corruption which affect improving social welfare as well as the political stability and economic development of the Republic of South Sudan. Chapter 3 focuses on the South Sudan economy and the challenges. Here we discuss the political and development challenges facing South Sudan as well as the investment opportunities. This chapter discusses the major challenges which face South Sudan, especially issues such as border demarcation, political reform, and oil shutdown as well as investment opportunities in oil and agriculture. In chapter 4, we discuss South Sudan's oil and economic development. It focuses on oil resources and their impact on sustainable development, the impact of oil shutdown on political and economic development and the possibility of deficit financing. In chapter 5, we discuss the future of stability and prosperity in South Sudan. It discusses how good governance and cooperation can be enormously beneficial to South Sudan in the process of building sustainable political and economic stability and what South Sudan can learn from other countries. The major findings of this study are as follows: - Political stability plays an important role in determining economic growth and economic development in many economies. - The degree of political stability is high if there is a high degree of democracy or autocracy. - Strong democracies or strong autocracies are best equipped to provide political stability that may lead to economic development. It is then the level of political stability within a given country, regardless of regime type, that results in economic growth. - Long-term sustainable economic growth depends on the ability to raise the rates of accumulation of physical and human capital by securing necessary sources (domestic, foreign, or deficit finance) to use efficiently for financing economic development. - Most economists view corruption as a major obstacle to development. It is seen as one of the causes of low income and is believed to play a critical role in generating poverty traps (e.g., Blackburn et al. 2006). Thus, corruption, according to this view, "sands" the wheels of development and it makes economic and political transitions difficult. - Not only is good governance critical to development, but it is also the most important factor in determining whether a country has the capacity to use resources effectively to promote economic growth and reduce poverty.
Categories: Business & Economics

The Effect of Political Stability and Governance on Economic Development

The Effect of Political Stability and Governance on Economic Development

This paper studies the effect of political stability and governance on economic development by consulting the literature, examining the data, and through empirical estimations.

Author: Rüçhan Kamil Altun

Publisher:

ISBN: OCLC:1305312592

Category:

Page: 52

View: 846

This paper studies the effect of political stability and governance on economic development by consulting the literature, examining the data, and through empirical estimations. Additionally, further attention is paid to the role of political leadership and democratic institutions. The empirical estimations involve a panel dataset containing 157 countries, including 35 developed and 122 developing countries, covering a 10-year period between 2002-2011. The results confirm the statistically and economically significant effect of political stability on economic development in the short and long run. All else equal, a one point increase in the political stability variable is associated with an increase of the GDP growth rate by around 1.38-1.62 percentage points or an increase of GDP per worker by around $1,207-$1,730. These results are robust to alternative model specifications and political stability indicators as well as after controlling for autocorrelation and heteroskedasticity. Using a cross-sectional IV-analysis these results are addressed for potential endogeneity caused by simultaneity (bidirectionality) although this point requires more attention and the use of strong time-variant instrumental variables. Regarding governance the effect of the control of corruption, government efficiency, and regulatory quality are significant and robust while, contrary to expectations, the rule of law and voice and accountability give insignificant results. Untimely and unanticipated executive changes have an additional significant detrimental effect on growth rates while elections have no significant effect regardless of the political system and level of development.
Categories:

The Effects of Diversity on Economic and Political Stability

The Effects of Diversity on Economic and Political Stability

Several studies describing the effects of different aspects of diversity on various economic and political outcomes are discussed. This is followed by chapter five which is addressing the causes of instability and civil conflict.

Author: Christian Brandes

Publisher: GRIN Verlag

ISBN: 9783668756397

Category: Business & Economics

Page: 79

View: 471

Master's Thesis from the year 2017 in the subject Economics - Other, grade: 1,7, http://www.uni-jena.de/, language: English, abstract: Many developing countries do not only suffer from weak institutions, poor economic performance and corruption, but also from separatist movements and violent civil conflicts. The question arises why some countries could achieve economic growth and development, while others never experienced considerable economic development and are trapped in a vicious circle of re-occurring violent conflicts and economic deterioration. Since developing countries tend to be more diverse in terms of ethnicity, language and religion and many civil conflicts appear to have an ethnic or religious component, diversity is regarded as a main cause of economic and political instability. Furthermore, many scholars consider higher levels of diversity in the least developed countries to be the crucial factor that leads to inefficient policy decisions and impedes growth and development. This master thesis addresses the question how diversity affects economic and political stability and elaborates appropriate parameters which are further used in a composite indicator (CI) to quantify a country’s stability, respectively instability. The thesis is structured as follows: After a review of the literature on the relations between diversity and economic development and civil conflicts in chapter two, the historic and environmental conditions under which different ethnic and linguistic groups emerged are described. Further, the effects of external shocks which shaped ethnic development in the special case of Africa are assessed. Chapter four introduces the most common measurements of ethnic, linguistic and religious diversity and describes the differences between fractionalisation and polarisation. Several studies describing the effects of different aspects of diversity on various economic and political outcomes are discussed. This is followed by chapter five which is addressing the causes of instability and civil conflict. It is examined how conflict, as the major outcome of instability, is related to and can be driven by diversity and which roles economic and institutional aspects play in explaining civil conflicts. In the subsequent part, several indicators which capture different aspects of stability are critically assessed. Further, parameters and their respective weights towards a new composite indicator of instability are elaborated. Subsequently, chapter seven concludes.
Categories: Business & Economics

Political Crises Social Conflict and Economic Development

Political Crises  Social Conflict and Economic Development

Examining new and rich information on episodes of political turmoil, military interventions, forced presidential resignations, constitutional reforms and social uprisings, this book will be required reading for all those interested in the ...

Author: Andrés Solimano

Publisher: Edward Elgar Publishing

ISBN: 1845425715

Category: Political Science

Page: 368

View: 856

Political Crises, Social Conflict and Economic Development is a rare attempt to undertake comparative political economy analysis of the Andean region and thus represents a welcome contribution. . . It is clearly written and will engage scholars interested in Latin America from a wide range of disciplines. Jonathan di John, Journal of Agrarian Change This collection of essays on the political economy of the Andean region goes to the heart of the struggle these smaller economies face in completing crucial reforms and achieving higher growth. Andrés Solimano has brought together the best and the brightest talent from each country, the result being the most compelling analysis ever of how enclave development and a historical dependence on primary exports renders these countries distinctly Andean. As the essays argue, the political solutions and economic remedies must address this phenomenon, rather than mimicking those strategies of the larger emerging market countries in the region. Carol Wise, University of Southern California, US The contributors to this authoritative volume analyze the impact of political crises and social conflict on economic performance in the Andean region of Latin America. The blend of theory and case studies is also relevant for understanding other complex societies in the developing world and transition economies. The book provides illuminating insights on how to understand, and survive, the complicated interactions between volatile politics, unstable democracies, violence, social inequality and uneven economic performance. Recent political economy theories are combined with valuable quantitative and qualitative information on presidential crises, breakdowns of democracy, constitutional reforms, quality of institutions, and social inequality and exclusion to understand actual country realities. Part I provides the conceptual framework and a regional perspective of the book. Part II contains five political economy country studies Bolivia, Colombia, Ecuador, Peru and Venezuela written by leading scholars in the field and former senior policymakers, including a former President. Together, the chapters highlight the detrimental effects of political instability and social conflict on economic growth and stability, as well as the feedback effects from poor economic performance on political instability and institutional fragility. The country studies warn that narrow economic reforms that do not pay adequate attention to politics, institutions and social structures are bound to fail in bringing lasting prosperity and stability to complex societies. Examining new and rich information on episodes of political turmoil, military interventions, forced presidential resignations, constitutional reforms and social uprisings, this book will be required reading for all those interested in the interface of politics and economic development.
Categories: Political Science

Financial Development Human Capital and Political Stability

Financial Development  Human Capital and Political Stability

The empirical results, based on a cross-sectional analysis of 57 developing countries, indicate that human capital and socio-political stability are important factors explaining the level of financial development of these markets.

Author: Jean François Outreville

Publisher:

ISBN: IND:30000138547132

Category: Economic stabilization

Page: 18

View: 997

Abstract: In this paper we take a look at the empirical relationship between the level of financial development and socio-economic variables reflecting different levels of development in the light of the recent literature on the role of human capital in economic development. The empirical results, based on a cross-sectional analysis of 57 developing countries, indicate that human capital and socio-political stability are important factors explaining the level of financial development of these markets.
Categories: Economic stabilization

The Effect of Food and Energy Security on Political Stability

The Effect of Food and Energy Security on Political Stability

Master's Thesis from the year 2019 in the subject Politics - International Politics - Topic: Miscellaneous, grade: 10, University of Marburg (Faculty of Business Administration and Economics Economics & Institutions), language: English, ...

Author: Mohamed Taher Sassi

Publisher: GRIN Verlag

ISBN: 9783346542250

Category: Political Science

Page: 65

View: 955

Master's Thesis from the year 2019 in the subject Politics - International Politics - Topic: Miscellaneous, grade: 10, University of Marburg (Faculty of Business Administration and Economics Economics & Institutions), language: English, abstract: Since both food security and energy security are countries’ strategic objective, this study typically advocates a deep understanding of the concept of political stability to incorporate food and energy security as a new pillar of conflict management based on an empirical understanding of the nexus and its effect. We used food deficit as proxy for food security and energy imports for energy security from the World Bank database. Suffering, mutilation and death of human beings are the most obvious and important effects of all conflicts, as well as natural disasters. Yet, material losses are also important because they reduce the livelihood and recovery capacities of conflict survivors. Moreover, in many cases, the indirect effects of conflict cause more deaths than direct violence. It has been found that generally the indirect costs of war are greater than its direct costs and persist long after the end of the conflict. Instability and conflict affect many economic sectors such as reducing foreign exchange earnings, which can have serious consequences for development and food security. Indeed, global population growth combined with the effects of climate change on agriculture pose the risk of a Malthusian trap to humanity that can only be avoided by a more efficient and sustainable production system. Energy security policies and climate policies are often considered as two sides of the same coin, their objectives being at least complementary, if not identical.
Categories: Political Science

The Impact of Political Instability and Nominal Interest Rate on Foreign Direct Investment The Case of Pakistan

The Impact of Political Instability and Nominal Interest Rate on Foreign Direct Investment  The Case of Pakistan

Essay from the year 2021 in the subject Economics - Case Scenarios, grade: 14, , language: English, abstract: This paper will focus on the impact of domestic interest rate and political instability on FDI of Pakistan using time series data ...

Author: Asif Hussain

Publisher: GRIN Verlag

ISBN: 9783346516022

Category: Business & Economics

Page: 19

View: 865

Essay from the year 2021 in the subject Economics - Case Scenarios, grade: 14, , language: English, abstract: This paper will focus on the impact of domestic interest rate and political instability on FDI of Pakistan using time series data from 1989-2019 in case of Pakistan. The findings are that political instability has a major impact for short time period and in long time period but in case of interest rate there is a negative minimal impact on FDI in both span of time. This can be because when you have lower nominal interest rate, thenyour domestic investor will benefit and country GDP will rise.
Categories: Business & Economics

Political Instability in Thailand Which Effects Does it Have on the Economy of the Country

Political Instability in Thailand  Which Effects Does it Have on the Economy of the Country

Seminar paper from the year 2018 in the subject Economics - Case Scenarios, RWTH Aachen University, language: English, abstract: What are the consequences of these frequent changes of government on the domestic economy in Thailand?

Author: Julius Henke

Publisher: GRIN Verlag

ISBN: 9783668967366

Category: Business & Economics

Page: 21

View: 190

Seminar paper from the year 2018 in the subject Economics - Case Scenarios, RWTH Aachen University, language: English, abstract: What are the consequences of these frequent changes of government on the domestic economy in Thailand? Is political instability likely to have a positive effect on economic growth? Against this background I would like to examine in this paper the extent to which political instability affects the economy in Thailand. First, the concept of political instability and the link to economic growth as presented in recent literature will be explained. A description of the political and economic history of Thailand will follow. After that, the relationship between political instability and economic growth within Thailand will be analysed using selected indicators. Between 1932 and 1997, Thailand had twenty-four governments, often emerging in the wake of major political crises. During these years, Thailand went through ten coups and sixteen failed coup attempts. Accordingly, the average tenure of a Thai government has been about twenty-four months. The longest survived one hundred months, under Prem Tinsulanonda (16th Prime Minister between 1980 and 1988) the shortest, under Suchinda Kraprayoon (19th Prime Minister between 7 April 1992 and 24 May 1992), only two months. Historically, Thailand had largely positive growth rates of between five and ten percent. Thailand's economy has grown increasingly over the last 25 years. Except for two major events, the Asian financial crisis in 1997 and the global economic crisis beginning in 2007. However, it can be said that economic growth in recent years has increased, despite the above-average number of changes of government and military coups. Political instability leads to greater uncertainty for economic actors within instable countries and can lead to fewer investments being made. The investment climate is suffering from violent conflicts such as civil wars, wars between nations, politically motivated attacks, coups d'états. Also frequent changes of government can generate uncertainty.
Categories: Business & Economics

The Role of Institutions In Achieving Financial Stability and Sustainable Economic Development In South Sudan

The Role of Institutions In Achieving Financial Stability and Sustainable Economic Development In South Sudan

South Sudan is currently facing a serious economic crisis occasioned by: i. the oil shutdown which began at the beginning of 2012; ii. the civil conflict which erupted in December 2013; iii. declining international crude oil prices which ...

Author: Addis Ababa Othow Akongdit

Publisher: Christian Faith Publishing, Inc.

ISBN: 9781645693680

Category: Business & Economics

Page: 312

View: 112

South Sudan is currently facing a serious economic crisis occasioned by: i. the oil shutdown which began at the beginning of 2012; ii. the civil conflict which erupted in December 2013; iii. declining international crude oil prices which went down by almost 62% (from USD 104 per barrel in 2013 to USD 40 in 2016); iv. drastic decline in the daily oil production as a result of partial closure of Upper Nile oil fields and; v. total shutdown of Unity State oil fields as a result of the war. All these factors have a significant negative impact on the South Sudan's economy. On the other hand, South Sudan has abundant and mostly untapped natural resources. It has great agricultural potential given that the country is very fertile and blessed with land, water and mineral resource which are substantial in relation to the relatively small population of 10 million plus. Effective management and development of these resources will therefore offer the prospect of sustained strong economic growth. Hence, the key research questions for this study are: Why some countries experience sustained levels of steady economic growth much faster while others stagnate? What can to improve the role of economic and political institutions in economic performance? There is extensive evidence that institutions matter a great deal in determining the level of economic development of a country. They strongly affect the economic performance of countries and act in society at all levels by determining the frameworks in which economic exchange occurs. Many Economists have shown that differences in institutions, as deep determinants of economic growth, account for much of the differences in income and productivity per head observed between countries (Acemoglu et al., 2005 ). Institutions shape the policy and governance setting in a given country, which in turn characterize the rule of law, risk of expropriation, political stability and ease of doing business. This study ends by suggesting the most importing mechanisms to strengthen the political and economic institutions that will create public trust in the government and its institutions and lead to sustainable development and prosperity. With that in mind, the institutions should support the public and private sector, capability, social infrastructure, good governance, rules of laws in order to achieve sustainable economic growth and financial stability. In this context, the main objectives of this study is to analyze the economic and political structure in South Sudan to ensure its role in achieving sustainable Economic Development and to analyze the effectiveness of macroeconomic policies in responding to economic shocks. It is also opted to examine the structural soundness of the South Sudan economy and the efficiency of its key institutions in addressing the challenges. In particular, the role of a strong and healthy financial sector in weathering shocks and sustaining growth. In light of the above, this study focuses on the greater role institutions have played in the economic development of several East Asian countries as well as Africa. Though, it is argued that the institutions can be weaker and ineffective simply because of administrative, institutional, ethnic, social and political challenges including poor enforcement of the rule of law, corruption, mismanagement, lack of strong civil society and political interference. However, the strength of an institution determines whether a country will be poor or wealthy, whether or not its people are free or oppressed and if its people will suffer from poverty or benefit from prosperity. Therefore, the main recommendations of this study can be summarized as follows: - developing effective, accountable and transparent institutions at all levels; - building a variety of healthy institutions that can accelerate and spearhead growth; - building strong political and governmental institutions that enhance the governance - reforming the institutions with an aim to move from situations of stagnation to rapid growth or a better development paths; The study embraces a multi-pronged methodology, pursuing a combination of relevant methods and approaches of data collection, including both primary and secondary information sources. This study is organized as follows: Chapter 1 discusses the institutions, financial stability and sustainable Economic Development, theoretical framework in which we explore in the empirical analysis. Chapter 2 presents the historical background of institutions in South Sudan Chapter 3 focuses on institutions and financial stability where we discuss the institutional policies and approach for financial stability as well as issues of globalization, transparency, accountability and its impact on financial stability. In chapter 4, I discuss institutions and sustainable economic growth. It focuses on fundamentals and strategies of sustainable economic development and the role of good governance and institutions in long-term economic growth. In chapter 5, we discuss the prospects of strong institutions, financial stability and sustainable Economic Development in South Sudan. It discusses how efficiency and soundness of South Sudan's key institutions can be extremely valuable in process of building a sustainable economic growth and what can South Sudan learn from others countries. The last chapter is the conclusions and recommendations of research. The major findings of this study are as follows: - Conflicts affect economic outcomes mainly through the destruction of human and physical capital, shifts in public spending and private investment, as well as the disruption of economic activities and social life. - Building effective, efficient and accountable institutions in fragile state like South Sudan can be problematic and challenging. Most importantly, good political and economic governance, based on transparency and accountability, should be the key for building a politically and economically viable state capable of articulating a common vision for national unity, and providing stability and dividends of peace to its aspiring citizens. - Strictly, from economic point of view, a political resolution of the current crisis is urgently needed in order for South Sudan to restore the confident of investors, put socio-economic development as one of its priorities and regain its place as the world's newest investment destination. - Social, political and economic stability in South Sudan will depend on core institutions performing their functions sufficiently well to manage public resources effectively and distribute them equitably
Categories: Business & Economics