The impact of sociopolitical instability on economic growth: Analysis and implications

Sociopolitical instability is considered detrimental to long-run growth. This paper presents the results of a thorough investigation of the effects of sociopolitical instability on growth, for a panel of countries over a 30-year period. Consistent with the existing literature, weak relationships between sociopolitical instability and growth are found. Political violence has the greatest adverse effects on growth. Also, the impact of sociopolitical instability is greater in countries with high levels of development and democracy. Robustness tests indicate little evidence of simultaneity problems, but estimation results are very sensitive to extreme observations, and to a lesser extent, parameter heterogeneity. The results suggest that one of the best ways to improve the lot of the poorest countries is the prevention and/or termination of violence and war.