Author:
Abstract
Political stability, like all other stability indices, has important effects on any economy. In the context of new political economy, the importance of political stability/instability on the economic indicators of the countries has recently been discussed. This study aims to reveal the linkage between political stability and GDP growth rate of the Middle East and North Africa and Turkey (MENAT countries) using annual dataset from the period 1984 to 2014. The results of the panel non-causality test introduced by Dumitrescu and Hurlin showed that GDP growth seemed to generate political stability, but not vice versa. We also calculated the elasticity of political stability to GDP growth. Every 1% increase in GDP growth would result in a 0,02% increase in political stability index in the selected country group. Therefore, this result supports the reality that a country’s GDP growth in selected countries is capable of stimulate having a more stable political environment.
Keywords
Abstract
Political stability, like all other stability indices, has important effects on any economy. In the context of new political economy, the importance of political stability/instability on the economic indicators of the countries has recently been discussed. This study aims to reveal the linkage between political stability and GDP growth rate of the Middle East and North Africa and Turkey (MENAT countries) using annual dataset from the period 1984 to 2014. The results of the panel non-causality test introduced by Dumitrescu and Hurlin showed that GDP growth seemed to generate political stability, but not vice versa. We also calculated the elasticity of political stability to GDP growth. Every 1% increase in GDP growth would result in a 0,02% increase in political stability index in the selected country group. Therefore, this result supports the reality that a country’s GDP growth in selected countries is capable of stimulate having a more stable political environment.