The Relation Between Political Stability and Economic Growth: The Turkish Case
This study investigates the long run relationship between political stability and economic growth of Turkey in between 2002 and 2016. Political stability has been referred to be one the causes of existence of strong institutions together with democracy for economic development for countries around the world. Empirical investigations have shown that strong institutions will be supported by political stability and democratic governance, and that these institutions will bring about robust economic growth. This work first focuses on how political stability index is related with the country’s economic output level (GDP) and then the focus moves on to see the long run relation between political stability and several other prevalent macro-economic variables such as inflation rate, exchange rate and short term interest rates. For this purpose, a bivariate regression models were used by running ARDL method. The study found that the political stability index, when used as sole independent variable, had no long run relationship with each of the selected macro-economic variables including gross domestic product when testing by Bound test of Pesaran. Later, a multivariate regression was used to see the effect of political stability index together with selected macro-economic variables on economic growth of Turkey. Upon building our econometric modeling for long run relation, the multivariate regression results suggest that, while political stability has positive relation with economic growth in the long run, it seems to be irrelevant in the short term. In addition, inflation is found to have a negative relation with economic growth in the long run, that is, when inflation increases the economic growth slows down in Turkey. One of the finding is that lagged value of exchange rate imply that decareasing value of Turkish lira put downward pressure on the economic growth.
Acemoglu, D. & Robinson, J. (2000). “Political Losers As Barriers to Economic Development”.American Economic Review, 90, pp.126-130.
Acemoglu, D., Johnson, S. & Robinson, J. (2003). “An African Success; Botswana In Search of Prosperity: Analytic Narratives On Economic Growth” ed. Dani Rodrik. Princeton, Nj: Princeton University Press.
Aisen, A. & Veiga, F.J., (2011). “How Does Political Instability Affect Economic Growth?”. IMF Working Paper, WP/11/12.
Alesina, A, Ozler, S., Roubini, N., & Swagel, P. (1992). “Political Instability and Economic Growth”. NBER Working Paper Series, 4173. September 1992.
Benhabib, J. & Spiegel, M.M. (1994). “The Role Of Human Capital in Economic Development Evidence From Aggregate Cross Country Data”. Journal of Monetary Economics 34(2), pp.143-173.
Bordo, M.D. & Schwartz, A.J. (1997). “Monetary Policy Regimes and Economic Performance: The Historical Record”. NBER Working Paper No: 6201.
Bouraoui, T. & Hammami H. (2017). “Does political instability affect exchange rate in Arab Spring countries” Applied Economics, volume 49, 2017. Issue 55.
Cangir, N. (2012). “Politik İstikrarsızlık ve Makroekonomik Performans İlişkisi: Türkiye Örneği”. PhD Thesis. Ankara: Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü.
Doğan, A. (2005). “Demokrasi ve Ekonomik Gelişme”. Erciyes Üniversitesi İİBF Dergisi, Sayı 25, Temmuz- Aralık.
Erol, M.(2001).“Sosyal Entropinin Verimlilik Üzerindeki Etkileri”. Cumhuriyet Üniversitesi İİBF Dergisi, 2(1), 127-143.
Feng, Y. (1997). “Democracy, Political Stability and Economic Growth”. British Journal of Political Science, 27(3), 391-418. doi:10.1017/S0007123497000197.
Kaplan, E.A. (2014). “Politik İstikrarın Ekonomik Büyüme Üzerindeki Etkisi: Ampirik Bir İnceleme”. BasılmamışYüksek lisans Tezi, Ankara: Gazi Üniversitesi Sosyal Bilimler Enstitüsü.
Karagöz, K. &Ergün, S. (2010). “Türkiye’de Ekonomik İstikrarsızlığın Kaynakları: Ekonometrik Bir Değerlendirme”.Süleyman Demirel Üniversitesi İİBF Dergisi, Vol.15, No.2 pp.169-185.
Masih, R.&Masih, A.M. M. (1996). “Stock-Watson dynamic OLS (DOLS) and error-correction modeling approaches to estimating long- and short-run elasticities in a demand function: New evidence and methodological implications from an application to the demand for coal in mainland China”. EnergyEconomics, 18 (1996) 315-334.
Pehlivan, H. (2009).“Politik İstikrar ve Ekonomik Performans: Ampirik Bir İnceleme”. Not published Master of Science Thesis, Ankara: Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü.
Rodriguez, F. & Rodrik, D. (2000). “TradePolicy And Economic Growth: A Skeptic’s Guide to the Cross National Evidence”. NBER Macroeconomics Annual, 15, pp. 261-325.
Şanlısoy, S. (2010).“Politik İstikrarsızlık – Ekonomik Süreç Politikaları Etkileşimi”.Sosyo Ekonomi. Sayı (2) Temmuz - Aralık.
Stiglitz, J. (2016). “TheTheory of Credit and Macro- EconomicStability”. NBER WorkingPaper No.22837.
Tabassam, A.H., Hasmi, S.H. &Rehman, U. (2016).“NexusBetween Political Instability And Economic Growth in Pakistan”. Procedia Social and Behavioral Sciences, 230, pp.325-334.
Tang, C. F. &Abosedra, S.(2014). “The Impacts Of Tourism, Energy Consumption and Political Instability On Economic Growth in MENA Countries” Energy Policy, Vol. 68, pp.458-464.
Tunçsiper, B. & Biçen, Ö.F. (2014). “Ekonomik Özgürlükler ve Ekonomik Büyüme Arasındaki İlişkinin Panel Regresyon Yöntemiyle İncelenmesi”.Eskişehir Osmangazi Üniversitesi İİBF Dergisi, 9(2), pp.25-45.
- Şu halde refbacks yoktur.
This work is licensed under a Creative Commons Attribution 3.0 License.