Political Instability and Firm Performance: A Microeconomic Evidence from Ivory Coast

Abstract

In this paper, we investigate how political instability affects firms' performance in Ivory Coast. Using data from the World Bank's 2016 survey of 361 firms in Ivory Coast, we perform a robust endogenous treatment model to assess the causal impact of political instability on firm productivity. The results indicate that political instability is statistically significant and negatively associated with firm performance. More specifically, firms that perceive political instability as an obstacle have XOF 511 million less annual sales than those which do not perceive political instability as an obstacle. Therefore, the government of Ivory Coast should develop strategies to reduce political instability in order to ensure efficient and performing firms.