December 10, 2013
News /
Posted by NCID

Arinze Nwokolo a doctoral student at the Univeristy of Navarrra presented yesterday his paper titled Does Political Instability affect Economic Growth and Financial Development? at a Workshop of the NCID. “It is important to realise that previous studies on this topic have not been conclusive!”, Arinze said emphatically. “This is not surprising” he added, “because it is not clear whether political violence and political instability indicators are correlated with economic development.”
The paper brought together two different strands of literature on economic growth - financial and economic. “The idea is simple” illustrasted Arinze. “..If it can be shown that political instability affects economic growth, in turn it follows that it would also affect the factors that determine or influence economic growth”. Using data for 209 countries for over 50 years he constructed measures of political instability indexes to ascertain their effect on economic growth. He also employed the system general method of moments (GMM) and bias-corrected least square dummy variable (LSDV) method to address cross country and regional dynamic panel estimation. 
“My results show that political instability affects economic growth and financial development” he said in conclusion “especially violence… as it affects growth and creates inequality!”. His take away point was that political instability affecs economic growth and institutional factors are important in reducing these incidences