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The Impact of Political Instability on Economic Growth: The Case of Guyana

In: Economic Challenges in Early 21st Century Guyana

Author

Listed:
  • Sukrishnalall Pasha

    (University of Guyana)

Abstract

This chapter empirically probes the nexus between political instability and economic growth in Guyana using time-series data covering the period 1961–2018 and GARCH (1,1) models. The results show that changes in the Head of State (HOS) exert a positive and significant impact on real GDP growth rates, while strikes have the opposite effect on economic growth. Other proxies of political instability, such as political assassinations, riots, insurrection, and terrorism, are not significantly related to growth in real GDP because of the dispersed nature of economic activities and their negligible effect on production and productivity. When the proxies of political instability are added to the conditional variance equation, the results indicate that only changes in Head of State (HOS) moderate volatility in growth rates. This is probably due to transitory goodwill enjoyed by the incoming Head of State that serves to dampen ethnic tensions, reducing instability. The latter result indicates the importance of democratic turnover.

Suggested Citation

  • Sukrishnalall Pasha, 2024. "The Impact of Political Instability on Economic Growth: The Case of Guyana," Springer Books, in: Dianna DaSilva-Glasgow & Tarron Khemraj & Desmond Thomas (ed.), Economic Challenges in Early 21st Century Guyana, chapter 0, pages 35-65, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-75019-9_3
    DOI: 10.1007/978-3-031-75019-9_3
    as

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