Political stability and economic growth in Asia

Abstract

This study investigates the effects of various factors of political instability on economic growth in selected ten Asian economies during 1990-2005. Our empirical findings show a close relationship between political stability and economic growth. We have analyzed the data by using ordinary least squire econometrics methods, which conclude that 32.35 scores increasing of index of political stability leads to one percent increase in economic growth. From these finding based on Asia experiences, we can conjecture that political stability plays a dominant role in determination of economic growth and sources of capital accumulation. This study uses the average proportion methods and Tinbergen diagrams to show the relative importance of political stability than economic freedom to accumulate capital, measured by four sources of capital accumulation which are proximate causes for economic growth. The results also clearly show that the role of political stability in accelerating economic growth is more vital than economic freedom. © 2008 Science Publications.