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Perception of political instability in election periods: Evidence from African firms

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  • Cazals, Antoine
  • Léon, Florian

Abstract

Political instability is a major obstacle to firms' investment and development. This article investigates how elections affect the perception of political instability of African firms. We use a survey-based dataset of approximately 21,500 firms in 33 African countries which we cross with 237 elections between 2004 and 2020. Our econometric strategy allows a detailed identification of election periods and the associated effects. We provide robust evidence of a pre-election increase in the perception of political instability by firms, but no, or limited post-election effects. The perception of political instability by firms is stronger for firms oriented towards foreign markets, in countries with non-democratic institutions or a high risk of conflict.

Suggested Citation

  • Cazals, Antoine & Léon, Florian, 2023. "Perception of political instability in election periods: Evidence from African firms," Journal of Comparative Economics, Elsevier, vol. 51(1), pages 259-276.
    • Handle: RePEc:eee:jcecon:v:51:y:2023:i:1:p:259-276
    DOI: 10.1016/j.jce.2022.09.003
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