Political Instability and Growth: The Central African Republic

Abstract

This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. This paper provides empirical evidence that the propensity for political instability in the Central African Republic (C.A.R.) has been increased by low tax revenues and deteriorations in the terms of trade. The direct effect of political instability on economic growth is not statistically significant, once account is taken of domestic investment, and economic growth in neighboring countries. The policy implications are: (i) mobilization of domestic revenues to pay public employees' salaries and provide basic social services would lower the probability of coups; (ii) economic diversification would reduce the propensity for adverse terms of trade shocks to fuel coups; and (iii) neighboring countries' efforts to resolve conflicts and achieve sustained growth would be beneficial for the C.A.R.'s economic performance.

Facing the heat: Political instability and firm new product innovation in sub‐Saharan Africa

“…One such prominent difference is the level of political instability (henceforth PI)—i.e., frequent changes in government, social unrest, violent conflicts, or regulatory volatility (Alesina & Perotti, 1996; Polachek & Sevastianova, 2012). Notably, firms in politically unstable countries suffer from greater uncertainty (Delios & Henisz, 2000; Guidolin & La Ferrara, 2007), higher operating costs (Svensson, 1998), and adverse political patronage (Ghura & Mercereau, 2004).…”

La zone Franc entrave-t-elle la transformation structurelle des économies des pays membres ?

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Productivity Growth And Economic Reform: Evidence From Rwanda

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