The Political Instability-Economic Growth Nexus in Five East African Countries

This study explores the political instability-economic growth nexus in five East African countries, i.e., Ethiopia, Kenya, Rwanda, Tanzania, and Uganda for the period 1996–2019. In that, it investigates both the short-run and long-run effects of political instability on economic growth in these countries. It uses a Panel Autoregressive Distributed Lag (Panel-ARDL) modeling approach for an error-correction model derived from a theoretical growth model. The findings suggest that political instability significantly and negatively affects the economic growth of these countries, both in the short-run and the long-run. The panel granger causality test also indicates a one-way causality from political instability to economic growth. However, there is no reverse causality found in the analysis. The findings imply the need for intensifying efforts to create a stable political environment to harness and sustain the growth momentum in the respective economies considered in this study.