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Perception of political instability in election periods: Evidence from African firms

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  • Antoine Cazals

    (Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Florian Léon

    (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

Abstract

Political instability is a major obstacle to firms' investment and development. This article investigates how elections affect the perception of political instability of African firms. We use a survey-based dataset of approximately 21,500 firms in 33 African countries which we cross with 237 elections between 2004 and 2020. Our econometric strategy allows a detailed identification of election periods and the associated effects. We provide robust evidence of a pre-election increase in the perception of political instability by firms, but no, or limited post-election effects. The perception of political instability by firms is stronger for firms oriented towards foreign markets, in countries with non-democratic institutions or a high risk of conflict.

Suggested Citation

  • Antoine Cazals & Florian Léon, 2023. "Perception of political instability in election periods: Evidence from African firms," Post-Print hal-04217742, HAL.
    • Handle: RePEc:hal:journl:hal-04217742
    DOI: 10.1016/j.jce.2022.09.003
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