Political Instability, Industry and Economic Growth in ECOWAS

Article DOI: https://doi.org/10.57017/jaes.v19.4(86).07

Author(s):

Jean Baptiste TIEMELE National Polytechnic Institute Felix Houphouet-Boigny, Yamoussoukro, Côte d'Ivoire
Mathieu Adou AKE Alassane Ouattara University, Bouaké, Côte d’Ivoire
Djakaridja KONE Faculty of Economics and Management Peleforo Gon Coulibaly, University, Korhogo, Côte d’Ivoire

Abstract:

According to the economic literature, the influence of political instability on economic activity is ambiguous. In the case of ECOWAS, we attempt to verify whether political instability conditions the effect of industrial performance on growth. The aim of our study is to verify the relationship between industrial performance and economic growth in ECOWAS under the influence of political instability over the period 1990-2018. To this end, we estimate a non-linear model using the Pool Mean Group (PMG) method. Our results show that political instability negatively influences the effect of industry performance on GDP growth in ECOWAS. However, there is a threshold level below which the political atmosphere does not significantly deteriorate the contribution of industrial performance to the ECOWAS economy. This threshold is 0.84% in our study.

Copyright© 2024 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

How to cite:

Tiemele, J. B., Ake, M. A., & Kone, D. (2024). Political instability, industry and economic growth in ECOWAS. Journal of Applied Economic Sciences, Volume XIX, Winter, 4(86), 437 – 446. https://doi.org/10.57017/jaes.v19.4(86).07

References:

[1] Acemoglu, D., & Johnson, S. (2005). Unbundling. Journal of Political Economic, 113(5). https://doi.org/10.1086/432166

[2] AfDB (2018) Africa's development dynamism. Annual Report of the African Development Bank Group. Abidjan, Côte d’Ivoire. www.afdb.org/annualreport

[3] Allen, R. C. (2003). Farm to Factory: A Reinterpretation of the Soviet Industrial Revolution. Princeton, NJ: Princeton University Press. https://doi.org/10.1017/S0022050704223129

[4] Breitung, J. & Das, S. (2005). Panel unit root tests under cross-sectional dependence. Statistica Neerlandica, 59(4), 414-433. https://doi.org/10.1111/j.1467-9574.2005.00299.x

[5] Cameron, G. (1996). Innovation and Economic Growth. CEPDP (277). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0753003007. http://eprints.lse.ac.uk/id/eprint/20685

[6] Choi, I. (2001). Unit root tests for panel data. Journal of International Money and Finance. 20(2), 249-272. http://www.sciencedirect.com/science/article/pii/S0261-5606(00)00048-6

[7] Collier, P. (2007). The Bottom Billion: Why the Poorest Countries are Failing and What Can be Done about It. Oxford: Oxford University Press, 85(11). https://doi.org/10.2471/BLT.07.045229

[8] Commander, S. & Nikoloski, Z. (2010). Institutions and economics performance: What can be explained? Discussion Paper n° 5247. https://ssrn.com/abstract=1696850

[9] Dirks, M., & Schmidt, T. (2023). The relationship between political instability and economic growth in advanced economies: Empirical evidence from a panel VAR and a dynamic panel FE-IV analysis. Ruhr Economic Papers, 1000, ISBN 978-3-96973-166-6, RWI - Leibniz-Institut für Wirtschaftsforschung, Essen. https://doi.org/10.4419/96973166

[10] Dollar, D., & Kraay, A. (2002). Growth is good for the poor. Journal of Economic Review, 4, 533-565. https://ssrn.com/abstract=632656

[11] Doucouliagos, H., & Ulubaşoğlu, M. A. (2008). Democracy and Economic Growth: A Meta-Analysis. American Journal of Political Science, 52(1), 61-83. https://doi.org/10.1111/j.1540-5907.2007.00299.x

[12]Duyen, M.T.T., & Tinh, T.P.D. (2024). The interrelationships between economic growth and innovation: International evidence. Journal of Applied Economics. 27(1), 2332975. https://doi.org/10.1080/15140326.2024.2332975

[13] Gocer, I., Alatas, S., & Perker, O. (2016). Effects of R&D and innovation on income in a country: New generation panel cointegration and causality analysis. Theoretical and Applied Economics, 23, 4(609), Winter, 153-164.

[14] Hausmann, R., Rodrik, D., & Velasco, A. (2007). Growth Diagnostics. In One Economics, Many Recipes, ed. Dani Rodrik, chapter 3. Princeton, NJ: Princeton University Press.

[15] Heritage foundation et Journal of Wall Street (2019). Perspective World Degree of economic freedom 2021. http://perspective.Usherbrooke.ca

[16]Hosny, A. (2017). Political stability, firm characteristics and performance: Evidence from 6083 private firms in the Middle East. Review Economics and Finance. https://doi.org/10.1515/rmeef-2017-0005

[17]Hsiao, C., Pesaran, M. H., & Tahmiscioglu, A. K. (1999). Bayes Estimation of Short-Run Coefficients in Dynamic Panel Data Models. in Analysis of Panels and Limited Dependent Variables: A Volume in Honour of G. s. Maddala, eds. C. Hsiao, K. Lahiri, L-F. Lee, and M. H., Cambridge, UK: Cambridge University Press. https://EconPapers.repec.org/ RePEc:cam:camdae:9804

[18]Hussen, M. S. (2023). Institutional quality and economic growth in Sub-Saharan Africa: A panel data approach. Journal of Economics and Development, 25(4), 332-348. https://doi.org/10.1108/JED-11-2022-0231

[19] Iritié, B.G.J.J. & Tiémélé, J. B. (2023). Foreign direct investment and economic growth in Côte d’Ivoire: An application of the bounds testing approach to cointegration. Cogent Economics & Finance, 11(1), 2223940. https://doi.org/10.1080/23322039.2023.2223940

[20] Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross- country investigation. The Quarterly Journal of Economics, 112(4),1251-1288. https://doi.org/10.1162/003355300555475

[21] Kos à Mougnol, A., & Kamajou, F. (2016). Determinants of Financial Development in Franc Cfa Zone Countries: The Role of Institutional Quality, European Scientific Journal, 12(12), 285-311. http://dx.doi.org/10.19044/esj.2016.v12n28p285

[22] Lin, J. Y. (2013). Demystifying the Chinese economy. The Australian Economic Review, 46(3), 259-268. https://doi.org/10.1111/j.1467-8462.2013.12035.x

[23] Maddala, G.S., & Wu, S. (1999). A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test. Oxford Bulletin of Economics and Statistics, 61(1), 631-652. https://doi.org/10.1111/1468-0084.0610s.1631

[24]Marshall, A. (1920). Industry and Trade. Macmillan & Co, London. https://www,archive,org/details/Cu31924014549301

[25] Mauro, P. (1995). Corruption and growth. Quarterly Journal of Economics, 110(3), 681-712. https://doi.org/10.2307/2946696

[26]Mokrani, A., Bechirsai, M., Ben Nasr, J. & Salah, B. M. (2020). The role of institutions in improving the productivity of the olive sector in Tunisia. Journal of New Sciences, 73(1). https://www.researchgate.net/publication/343473840

[27] Nelson, R., & Sampat, B. N. (2001). Making sense of institutions as a factor shaping economic performance. Journal Economic Behaviour and Organization, (44), 31-54. https://doi.org/10.1016/S0167-2681(00)00152-9

[28] Newey, W. K., & West., K. D. (1994). Automatic Lag Selection in Covariance Matrix Estimation. The Review of Economic Studies, 61(4), 631-653. https://doi.org/10.2307/2297912

[29] Olbrecht, V. (2016). Multilevel modelling in exploring institutional effects on performance. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 64(6), 2087-2094. https//doi.org/10.11118/actaun201664062087

[30] Pesaran, M. H. (2007). A Simple Panel Unit Root Test in the Presence of Cross Section Dependence. Journal of Applied Econometrics, 22, 265-312. https://doi.org/10.1002/jae.951

[31] Pesaran, M. H., Shin, Y., & Smith, R. P. (1999). Pooled Mean Group estimation of dynamic heterogeneous panels. Journal of American statistical Association, 94 (446), 621-634. https://doi.org/10.2307/2670182

[32] Pesaran, M. H., & Smith, R. P. (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics, 68(1), 79-114. https://doi.org/10.1016/0304-4076(94)01644-F

[33] Ravaillon, M., & Chen, S. (2003). Measuring pro-poor growth. Economics Letters, 78(1), 93-99. https://doi.org/10.1016/S0165-1765(02)00205-7

[34]Rekurd, S. M., Saeed, M.K., Muhammad,W., & Rana, T.N. (2024). Moderating role of political stability and economic policy uncertainty between country governance practice and stock market performance. A comparative analysis of Pakistan and Kurdistan Region of Iraq. PoLS ONE, 19(4), e03011696. https://doi.org/10.1371/journal.pone.0301698

[35] Sorfina, D. (2023). The Relationship between Democracy and Economic Growth: An Empirical Analysis. Asia Social Issues, 16(1),1-18. https://doi.org/10.48048/asi.2023.254430

[36] Westerlund, J. (2008). Panel cointegration tests of the Fisher effect. Journal of Applied Econometrics, 23, 193-233. https://doi.org/10.1002/jae.967

[37] WDI (2019). World development indicators, Last update 06/09/2019. Technical report, Banque Mondiale. Washington.

[38] Williams, N., & Vorley, T. (2017). Fostering entrepreneurship and economic growth: Pathways to economic resilience in Kosovo. World Review of Entrepreneurship Management and Sustainable Development, 13(2), 159-177. https://doi.org/10.1504/WREMSD.2017.083019

[39] Wong, S. H-W. (2010). Political connections and firm performance: The case of Hong Kong. Journal of East Asian Studies,10, 275-313. https://doi.org/10.1017/S1598240800003465

[40] Yoo, S. H. (2006). The Causal Relationship between Electricity Consumption and Economic Growth in the ASEAN countries. Energy Policy, 34, 3573-3582. https://doi.org/10.1016/j.enpol.2005.07.011