Is Elite Political Stability a Necessary Condition for Economic Growth? An Empirical Evidence from the Baltic States
AbstractThe growth theory of new political economy distinguishes two types of political instability - elite (violent coups, riots) and non-elite (non-violent government breakdowns). The purpose of the paper is to show that elite political stability is not a necessary condition for economic growth, i.e. we cast a doubt on a generality of growth theory when considering not exact term of political stability. Our hypothesis is tested on panel data from the Baltic states where a number of government changes has taken place and still fast economic growth can be seen over the last two decades. A dynamic ordinary least square (DOLS) model is used to estimate production function augmented with an elite political instability variable. Since it is shown that elite political instability has a negligible impact on economic growth, we consider the hypothesis regarding the necessity of political stability for economic development to be only a specific non-generalizable case, emphasizing the necessity of distinguishing elite and non-elite political instability.
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Bibliographic InfoPaper provided by Mendel University in Brno, Faculty of Business and Economics in its series MENDELU Working Papers in Business and Economics with number 2011-15.
Date of creation: Nov 2011
Date of revision:
new political economy; political instability; elite political instability; production function; single equation; Baltic states;
Find related papers by JEL classification:
- B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
- C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
- P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-28 (All new papers)
- NEP-FDG-2011-11-28 (Financial Development & Growth)
- NEP-POL-2011-11-28 (Positive Political Economics)
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