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The Impact of Political Stability on Economic Growth in European Union

Author

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  • Emilia Anuta Corovei

    (“1st of December 1918†University of Alba Iulia)

  • Adela Socol

    (“1st of December 1918†University of Alba Iulia)

Abstract

In our empirical study we analyze the impact of political stability on GDP growth forEuropean Union Countries over the period 2000-2017. We ran a panel OLS regression with robust standard errors and we removed panel autocorrelation and heteroskedasticity from our data. We consider a politically stable country when doesn’t face with conflicts, protests, radical changes of regimes, terorismand wars. Political risk is often associated with foreign investments. Foreign investors are not willing to invest in war and conflict countries, in regions where the legislative, executive and judiciary powers can not operate under normal democratic conditions. Our empirical results indicate that there is a positive and a significant relationship between political stability and GDP growth.

Suggested Citation

  • Emilia Anuta Corovei & Adela Socol, 2019. "The Impact of Political Stability on Economic Growth in European Union," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 8-14, August.
    • Handle: RePEc:ovi:oviste:v:xix:y:2019:i:1:p:8-14
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    1. Dumitrescu Bogdan Andrei & Dedu Vasile & Enciu Adrian, 2009. "The Correlation Between Unempoyment And Real Gdp Growth.A Study Case On Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 2(1), pages 317-322, May.
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    3. Randall G. Holcombe & Donald J. Lacombe, 2004. "The Effect of State Income Taxation on Per Capita Income Growth," Public Finance Review, , vol. 32(3), pages 292-312, May.
    4. 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.
    5. Nazeer, Abdul Malik & Masih, Mansur, 2017. "Impact of political instability on foreign direct investment and Economic Growth: Evidence from Malaysia," MPRA Paper 79418, University Library of Munich, Germany.
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    Cited by:

    1. Mahmood ul Hasan & Nawazish Ameer Haider & Saif Ullah, 2023. "Democracy, Political Stability and Economic Growth: A Panel Data Analysis of Selected Asian Countries," Journal of Economic Impact, Science Impact Publishers, vol. 5(1), pages 92-99.
    2. Zeeshan, Muhammad & han, Jiabin & Rehman, Alam & Ullah, Irfan & Hussain, Arif & Alam Afridi, Fakhr E., 2022. "Exploring symmetric and asymmetric nexus between corruption, political instability, natural resources and economic growth in the context of Pakistan," Resources Policy, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    GDP growth; Political stability; European Union;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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