Abstract

Political instability is often considered to have a negative influence on economic growth. Hence, the study aims to examine whether instability of the political environment (measured by the political stability in- dex and duration of the chief executive in the office) significantly influences economic growth in Central and Eastern European (CEE) countries. The methodology used is a fixed effects model for panel data analysis where the dependent variable is the real growth of gross domestic product (GDP) per capita. The data covers the period from 2006 to 2016 for 13 CEE countries. Additionally, the study considered other macroeconomic variables, such as investment, inflation, human capital, trade openness, etc. The research findings indicate that the political stability index has a positive effect on economic growth, as expected and predicted in the literature. However, the indicator of the years the chief executive has been in the office has shown a negative effect. This effect appears to be weakly significant only for the second variable. These findings allowed us to conclude that the political stability index positively influences economic growth, while the years the chief executive stays in the office has a negative effect. Frequent changes in the cabinet can actually have a positive impact in transition countries characterised by corruption, meaning that the long stay of a chief executive in the office can lead to power abuse.

Details

Title
Impact of Political Instability on Economic Growth in CEE Countries
Author
ela, Arjona Ç; Hysa, Eglantina
Pages
582-592
Section
INTERNATIONAL ECONOMIC ACTIVITY
Publication year
2021
Publication date
2021
Publisher
Institute of economics of the Ural Branch of the Russian Academy of Sciences
ISSN
20726414
e-ISSN
24111406
Source type
Scholarly Journal
Language of publication
English; Russian
ProQuest document ID
2543760135
Copyright
© 2021. This work is published under http://creativecommons.org/licenses/by-nc/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License.