IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/110696.html
   My bibliography  Save this paper

The Macroeconomic Impact of Recent Political Conflicts in Africa: Generalized Synthetic Counterfactual Evidence

Author

Listed:
  • Diop, Samba
  • Asongu, Simplice
  • Tchamyou, Vanessa

Abstract

This paper measures the macroeconomic impact of recent political crisis, protest and uprisings in Africa with the generalized synthetic control method and evaluates the role played by natural resource dependence in the modulation of the impact. We find that political crisis, protests and uprisings have a significant and negative impact on economic growth while the impact is positive on investment and price level. For economic growth, the deviation of the actual series from the counterfactual is negative, instantaneous, persistent and highly significant; indicating non-negligible costs of the shock. Indeed, dependence on natural resources amplifies the negative effect of political crisis, protests and uprisings on GDP. Finally, the more the treated country depends on natural resources, the more it becomes resilient from the investment losses caused by political crisis.

Suggested Citation

  • Diop, Samba & Asongu, Simplice & Tchamyou, Vanessa, 2021. "The Macroeconomic Impact of Recent Political Conflicts in Africa: Generalized Synthetic Counterfactual Evidence," MPRA Paper 110696, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:110696
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/110696/1/MPRA_paper_110696.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "The role of lifelong learning on political stability and non violence: evidence from Africa," Journal of Economic Studies, Emerald Group Publishing, vol. 43(1), pages 141-164, January.
    2. Olson, Mancur, 1963. "Rapid Growth as a Destabilizing Force," The Journal of Economic History, Cambridge University Press, vol. 23(4), pages 529-552, December.
    3. Campos, Nauro F. & Coricelli, Fabrizio & Moretti, Luigi, 2014. "Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method," IZA Discussion Papers 8162, Institute of Labor Economics (IZA).
    4. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "The Impact of Terrorism on Governance in African Countries," World Development, Elsevier, vol. 99(C), pages 253-270.
    5. Stefano Costalli & Luigi Moretti & Costantino Pischedda, 2017. "The economic costs of civil war," Journal of Peace Research, Peace Research Institute Oslo, vol. 54(1), pages 80-98, January.
    6. Xu, Yiqing, 2017. "Generalized Synthetic Control Method: Causal Inference with Interactive Fixed Effects Models," Political Analysis, Cambridge University Press, vol. 25(1), pages 57-76, January.
    7. Makram El-Shagi & Axel Lindner & Gregor von Schweinitz, 2016. "Real Effective Exchange Rate Misalignment in the Euro Area: A Counterfactual Analysis," Review of International Economics, Wiley Blackwell, vol. 24(1), pages 37-66, February.
    8. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Clark, Jeremy, 2017. "The evolution of the natural resource curse thesis: A critical literature survey," Resources Policy, Elsevier, vol. 51(C), pages 123-134.
    9. Asongu, Simplice & Nnanna, Joseph, 2019. "Foreign aid, instability and governance in Africa," MPRA Paper 101087, University Library of Munich, Germany.
    10. Eduardo Cavallo & Sebastian Galiani & Ilan Noy & Juan Pantano, 2013. "Catastrophic Natural Disasters and Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1549-1561, December.
    11. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Revolution empirics: predicting the Arab Spring," Empirical Economics, Springer, vol. 51(2), pages 439-482, September.
    12. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    13. David Kelsey & Sara le Roux, 2018. "Strategic ambiguity and decision-making: an experimental study," Theory and Decision, Springer, vol. 84(3), pages 387-404, May.
    14. Bhattacharyya, Sambit & Hodler, Roland, 2010. "Natural resources, democracy and corruption," European Economic Review, Elsevier, vol. 54(4), pages 608-621, May.
    15. Constantin Colonescu, 2017. "Macroeconomic Effects of the European Monetary Union: A Counterfactual Analysis," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 3(2), pages 171-186, April.
    16. Hashmat Ali & Wang Qingshi & Irfan Ullah & Zulfiqar Ali, 2017. "How Terrorism Affects Foreign Direct Investment in Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 625-631.
    17. John Anyanwu, 2002. "Working Paper 73 - Economic and Political Causes of Civil Wars in Africa: Some Econometric Results," Working Paper Series 207, African Development Bank.
    18. Harald Badinger & Peter Egger, 2017. "Spacey Parents and Spacey Hosts in Foreign Direct Investment," Economica, London School of Economics and Political Science, vol. 84(335), pages 480-497, July.
    19. Riccardo Pelizzo & Zim Nwokora, 2016. "Bridging the Divide: Measuring Party System Change and Classifying Party Systems," Research Africa Network Working Papers 16/042, Research Africa Network (RAN).
    20. David Kelsey & Sara Le Roux, 2017. "Dragon Slaying with Ambiguity: Theory and Experiments," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(1), pages 178-197, February.
    21. Xin Li & Hsu Ling Chang & Chi Wei Su & Yin Dai, 2017. "Does foreign direct investment promote exports in China?," China Finance Review International, Emerald Group Publishing Limited, vol. 7(2), pages 185-202, May.
    22. Martin C. McGuire & Mancur Olson, 1998. "The Economics of Autocracy and Majority Rule: The Invisible Hand and the Use of Force," International Economic Association Series, in: Silvio Borner & Martin Paldam (ed.), The Political Dimension of Economic Growth, chapter 3, pages 38-73, Palgrave Macmillan.
    23. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    24. Simplice A. Asongu & Thales P. Yapatake Kossele & Joseph Nnanna, 2021. "Not all that glitters is gold: political stability and trade in Sub-Saharan Africa," Research Africa Network Working Papers 21/005, Research Africa Network (RAN).
    25. Godwin Okafor, 2017. "The impact of political instability on the economic growth of ECOWAS member countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 28(2), pages 208-229, March.
    26. Alesina, Alberto & Özler, Sule & Roubini, Nouriel & Swagel, Phillip, 1996. "Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
    27. -, 2017. "Foreign Direct Investment in Latin America and the Caribbean 2017," La Inversión Extranjera Directa en América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 42024 edited by Eclac, May.
    28. Gadong Toma Dalyop, 2020. "Tax structure and political instability in Africa," International Journal of Economic Policy Studies, Springer, vol. 14(1), pages 77-121, February.
    29. Coricelli, Fabrizio & Campos, Nauro & Moretti, Luigi, 2014. "Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Co," CEPR Discussion Papers 9968, C.E.P.R. Discussion Papers.
    30. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    31. Kevin Williams, 2017. "Foreign Direct Investment, Economic Growth, and Political Instability," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(2), pages 17-37, June.
    32. Li, Xinjian & Huang, Songshan (Sam) & Song, Changyao, 2017. "China's outward foreign direct investment in tourism," Tourism Management, Elsevier, vol. 59(C), pages 1-6.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samba Diop & Simplice A. Asongu & Vanessa S. Tchamyou, 2021. "Mitigating the Macroeconomic Impact of Severe Natural Disasters in Africa: Policy Synergies," Working Papers 21/094, European Xtramile Centre of African Studies (EXCAS).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simplice A. Asongu & Thales P. Yapatake Kossele & Joseph Nnanna, 2021. "Not all that glitters is gold: political stability and trade in Sub-Saharan Africa," Research Africa Network Working Papers 21/005, Research Africa Network (RAN).
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2024. "Governance quality and trade performance in Sub‐Saharan Africa," World Affairs, John Wiley & Sons, vol. 187(1), pages 78-93, March.
    3. Nils Verheuvel & Joost Witteman & Marilou Vlaanderen, 2023. "Synthetic Control Method for Dutch Policy Evaluation," De Economist, Springer, vol. 171(1), pages 51-83, March.
    4. Simplice A. Asongu & Nicholas M. Odhiambo, 2022. "The paradox of governance and natural resource rents in Sub-Saharan Africa," Working Papers 22/020, European Xtramile Centre of African Studies (EXCAS).
    5. Emery Thomas J. & Kovac Mitja & Spruk Rok, 2023. "Estimating the Effects of Political Instability in Nascent Democracies," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 243(6), pages 599-642, December.
    6. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    7. Pekka Malo & Juha Eskelinen & Xun Zhou & Timo Kuosmanen, 2024. "Computing Synthetic Controls Using Bilevel Optimization," Computational Economics, Springer;Society for Computational Economics, vol. 64(2), pages 1113-1136, August.
    8. Samer Matta & Michael Bleaney & Simon Appleton, 2022. "The economic impact of political instability and mass civil protest," Economics and Politics, Wiley Blackwell, vol. 34(1), pages 253-270, March.
    9. Andrii Melnychuk, 2024. "Synthetic Controls with spillover effects: A comparative study," Papers 2405.01645, arXiv.org.
    10. Jacob Bundrick & Weici Yuan, 2019. "Do Targeted Business Subsidies Improve Income and Reduce Poverty? A Synthetic Control Approach," Economic Development Quarterly, , vol. 33(4), pages 351-375, November.
    11. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.
    12. Makram El-Shagi & Axel Lindner & Gregor von Schweinitz, 2016. "Real Effective Exchange Rate Misalignment in the Euro Area: A Counterfactual Analysis," Review of International Economics, Wiley Blackwell, vol. 24(1), pages 37-66, February.
    13. Samba Diop & Simplice A. Asongu & Vanessa S. Tchamyou, 2021. "Mitigating the Macroeconomic Impact of Severe Natural Disasters in Africa: Policy Synergies," Working Papers of the African Governance and Development Institute. 21/094, African Governance and Development Institute..
    14. Pier Basaglia & Sophie M. Behr & Moritz A. Drupp, 2023. "De-Fueling Externalities: How Tax Salience and Fuel Substitution Mediate Climate and Health Benefits," Discussion Papers of DIW Berlin 2041, DIW Berlin, German Institute for Economic Research.
    15. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "Governance, capital flight and industrialisation in Africa," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-22, December.
    16. Essers, Dennis & Ide, Stefaan, 2019. "The IMF and precautionary lending: An empirical evaluation of the selectivity and effectiveness of the Flexible Credit Line," Journal of International Money and Finance, Elsevier, vol. 92(C), pages 25-61.
    17. Simplice A. Asongu, 2019. "FDI in Selected Developing Countries: Evidence from Bundling and Unbundling Governance," Working Papers 19/057, European Xtramile Centre of African Studies (EXCAS).
    18. Francesca Caselli, 2017. "Did the Exchange Rate Floor Prevent Deflation in the Czech Republic?," Review of Economics and Institutions, Università di Perugia, vol. 8(2).
    19. Francois Cornelius Wehncke & Patricia Lindelwa Makoni & Godfrey Marozva, 2022. "Nexus Between FDI, ODA and Economic Growth in Developing African Countries: A Systems Approach," Economic Research Guardian, Mutascu Publishing, vol. 12(2), pages 97-114, December.
    20. Absher, Samuel & Grier, Robin & Grier, Kevin, 2023. "The consequences of CIA-sponsored regime change in Latin America," European Journal of Political Economy, Elsevier, vol. 80(C).

    More about this item

    Keywords

    political conflicts; economic growth; Africa;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:110696. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.