Macroeconomic conditions and political instability: An empirical analysis

This article uses statistical methods to examine the relationship between two key macroeconomic indicators—inflation and economic growth—and four measures of political instability—peaceful unrest, violent unrest, coups d’etat, and changes of government. Using a panel research design and fixed effects regression analysis, I examine first whether contemporaneous relationships exist between these two groups of variables and then the direction of causality between them. Peaceful unrest clearly produces higher inflation and slower growth. Oddly, coups d’etat seem to producelower inflation, and there is some evidence that reverse causation may operate here as well—that high inflation mayreduce the likelihood of coups. Slow economic growth is associated with higher levels of violent unrest and a higher likelihood of coups and changes of government, but the direction of causality in these relationships is not clear. These findings, taken together, suggest that the relationship between macroeconomic conditions and political instability runs primarily from the latter to the former, raising doubts about the widely held view that poor economic conditions generally produce unrest and instability. Mark J. Gasiorowski is an Associate Professor in the Department of Political Science at Louisiana State University. He is currently working on a project focusing on the relationship between democracy and macroeconomic conditions.     

Long Live Democracy: The Determinants of Political Instability in Latin America

We investigate the underlying causes of political instability in a panel of 18 Latin American countries from 1971–2000. We test whether regime type, regime durability, factionalism, income inequality, ethnic diversity, ethnic discrimination, regional spillover effects, urban growth and macroeconomic variables matter for instability. We find several important results: (1) democracy has a significant negative effect on instability that is robust to several alternative specifications; (2) factionalised political systems experience higher instability; (3) income inequality, ethnic fractionalisation, and urban growth have important nonlinear effects on instability; and (4) of the macroeconomic variables we study, only openness to trade has a significant negative effect on instability.     

Institutions and Poverty

This study utilises eight alternative measures of institutions and the instrumental variable method to examine the impacts of institutions on poverty. The estimates show that an economy with a robust system to control corruption, an effective government, and a stable political system will create the conditions to promote economic growth, minimise income distribution conflicts, and reduce poverty. Corruption, ineffective governments, and political instability will not only hurt income levels through market inefficiencies, but also escalate poverty incidence via increased income inequality. The results also imply that the quality of the regulatory system, rule of law, voice and accountability, and expropriation risk are inversely related to poverty but their effect on poverty is via average income rather than income distribution.     

Political instability and savings in less developed countries: Evidence from Sub‐Saharan Africa

A four‐equation model is used to investigate the effects of political instability (PI) on the savings rate in Sub‐Saharan Africa. Utilising a comprehensive measure of PI, we find that political instability has a deleterious effect on the savings rate both directly and indirectly through a reduction in investment and economic growth. The negative effects of PI on savings rate occurs contemporaneously as well as with a lag. We also find that economic growth has a stabilising effect on the political system and that not accounting for these effects through a simultaneous equations model results in biased coefficient estimates. These relationships are robust with respect to model specification. The implication of our results is that ‘economic factors’ alone cannot explain the development process in Less Developed Countries.     

Perilous semi-presidentialism? On the democratic performance of Timor-Leste government system

ABSTRACT

Timor-Leste chose semi-presidentialism as its government system to steer the country towards a democratic state. This government system became popular in the course of the ‘Third Wave’ of democratization, but has no other example in Southeast Asia. The Timorese Constituent Assembly was guided not by an appraisal of the virtues and pitfalls of competing systems, but by historical and political factors that led it to craft an institutional solution in line with significant features of Timorese society. Yet the specific form of semi-presidentialism adopted in Timor-Leste (‘president-parliamentarism’) is regarded in the literature as prone to instability. However, in spite of episodes of instability, the conclusion emerging from three consecutive presidencies is one of positive steps in democracy-building and consolidation. This is mainly due to the emergence of ‘independent’ presidents who have sought power-sharing arrangements and promoted inclusive governance.     

Budgetary chaos and evasion: the case of somalia

In 1990 and 1991, several Sub-Saharan African nations (Liberia, Somalia, and Ethiopia) experienced violent disintegration of existing governments. Other nations (Mozambique, South Africa, Kenya, and Zaire) continued to show signs of being on the brink of violent upheaval, while Zambia experienced a major democratic shift in its government. The forces of change in Africa seem to be mirroring political change that has and continues to take place in eastern Europe and in the territories of the former Soviet Union. This paper is a case study of national budgetary and financial management during a period of national disintegration. The information comes from observations formed during the final days of the political regime of one of these Sub-Saharan African nations - the Republic of Somalia.

The twenty-one year political regime of Mohamed Siad Barre in Somalia came to an end in January 1991 when rebel forces captured the capital city of Mogadishu, forcing Barre and his remaining followers to flee the capital. In the weeks and months leading up to the end of the regime, the normal functioning of the government had effectively ceased, collapsing under the weight of corrupt practices and substantial inefficiencies resulting from the government policies.

This paper describes some of these practices as they related to the national budgetary and financial management processes. In particular, the existence of chaos and evasion in national budgeting was evident with the existence of repetitive budgeting, lump sum budgeting, escapist budgeting, underfunding, externally driven policy, and information gaps. The analysis conducted suggests the importance of sound budget practices for the stability of a government. The conclusions derived focus on the issue of the role of political instability, attempts to modernize, and general systems organization as they relate to Somalia.     

论巴基斯坦部落地区的塔利班化

由于持久的经济恶化与社会动荡、腐败的政府政治架构、在反恐议题上同西方进一步结盟与合作等原因,巴基斯坦的部落地区不断塔利班化,主要表现为极端主义、武装暴力和群众参与。其主要后果是严重影响到巴基斯坦国内政局的稳定。西方军事力量将可能长期驻扎在阿富汗,而中巴两国“全天候”的关系也将面临激进宗教势力和分离主义势力的挑战。     

Before and after Dayton: The UN and NATO in the former Yugoslavia

Business managers name Africa's political instability as a key obstacle to economic development, but many companies continue to invest in Africa. The article explains this apparent contradiction by looking at the case of Shell in Nigeria. Nigeria experiences serious political instability, yet Shell is expanding its investment in the country. This article deals with sources of firm-specific political instability that have affected Shell in Nigeria in the past and attempts to explain why a specific corporation such as Shell may want to make investments in the country despite political instability. The examination of three different angles of Shell's activity, which forms the core of this paper, reveals that political instability does not hinder Shell from operating in Nigeria. Firstly, the international perspective illuminates in what way Nigeria may be more attractive to Shell than other countries. Profits in Nigeria appear to be higher than elsewhere, while Shell occupies a dominant market position unrivalled in most other countries. Secondly, the structural perspective illuminates the interconnectedness of Shell with state structures in Nigeria that may tie the company to Nigeria. Shell established a first mover advantage in the 1950s, since Nigeria was a British colony until 1960 and British oil companies were given preferential treatment. After independence, Shell managed to penetrate state structures which helped to hedge political risk in the country. Thirdly, the strategic perspective explores how Shell's strategic approaches may make political instability less significant to Shell. This article concludes that Shell has adopted to political instability. The conclusion that political instability can be conducive to business is significant since one expects political instability to be inherently harmful to business.     

An Alternative Understanding of Political Participation: Challenging the Myth of Political Indifference in Hong Kong

Abstract

The characterization of Hong Kong's political culture as one of indifference deserves further examination as the inquiries conducted by proponents of the indifference framework have all used a narrow definition of political participation. This paper begins with a critique of the inherent narrowness of orthodox definitions of political participation: political participation as acts making demands on a government; as lawful activities; and as activities vis‐a‐vis one government. Contrast these assumptions, the author contends that political participation needs to be understood as activities that include both making demands on and showing support for a government, as well as both lawful and unlawful activities. Furthermore, the author refutes the one‐government‐locus theme of the orthodox concept and proposes a three‐government‐loci theme that is more relevant to the historical experience of the colonial Hong Kong. The political relevance of the social domain and its implications on broadening the definition of political participation are discussed. Finally, the author argues for the importance of considering discursive participation as a form of political participation in Hong Kong.     

Democratic Consolidation in Timor-Leste: Achievements,Problems and Prospects

Timor-Leste has had three rounds of major elections, all of which have been widely regarded as meeting international criteria for being free and fair. There has also been one change of government on the basis of these elections. On these grounds, some observers have suggested that Timor-Leste has met the benchmark for having consolidated its democracy. Timor-Leste can be said to meet the criteria for an expanded minimalist definition of democracy, holding regular, free and fair elections within an open competitive political environment, with relatively little violence and intimidation and general freedom of expression. This political process has, as defined by the literature, also consolidated. However, Timor-Leste continues to face future economic challenges. The literature indicates that states with high levels of poverty, unemployment and with food shortages are more prone to political instability. Given that Timor-Leste's political party system relies heavily on charismatic individuals and, apart from Fretilin, has poor party structures, loss of current political leaders will add a further destabilising effect. Expected economic problems are likely to manifest around the same time that the current generation of political leaders are no longer active. The question will be, in this increasingly challenging environment, whether Timor-Leste can sustain its democracy.     

Political Instability and Export Performance in Sub-Saharan Africa

The political landscape of post-independent sub-Saharan Africa (SSA) has been one of rampant coups d'etat. Existing evidence suggests such elite political instability (PI) has been growth-inhibiting even when exports are accounted for. In the light of the increasing interest in the role of export-promotion strategies in fostering economic growth, however, the present paper examines the impact of PI on export performance in these economies. The paper explores the hypothesis that the lack of a stable political environment adversely influences export performance via competitiveness, and that PI may actually play a more crucial role in export than in overall GDP growth. Based on detailed data on the incidence of coups in 30 SSA countries, real export growth over 1967-1986 is regressed on a principal-component of the various forms of coup events - "successful" coups, abortive coups, and coup plots - as well as on export structure, terms of trade, production capacity, and exchange rate misalignment. The results support the above hypothesis of an adverse impact of PI on export growth, and further suggest that PI has been even more deleterious to exports than to overall GDP.     

Electoral and Political Changes: the Impact on Political Bureaucratic Relationships in Scottish Local Government

This paper explores a fundamental issue in public administration: the political bureaucratic relationship or political administrative interface. Much of the research and writing hitherto has been at central government level; and while important work on local government exists, relatively little exists on local government. The paper makes an important contribution to the field by researching aspects of the political administrative interface in the context of significant electoral and political changes in Scottish local government, which introduced single transferable voting and multi member wards. The research found an increase in intensity of senior bureaucrats' political management roles, a greater bureaucratisation of political and policy roles, increased scrutiny yet mixed findings about democratic processes. The approach and findings open up the research field and the paper concludes by suggesting some areas of future research potential.     

Draining the Swamp: Democracy Promotion,State Failure,and Terrorism in 19 Middle Eastern Countries

This study empirically evaluates the question of whether or not the promotion of democracy in the Middle East will reduce terrorism, both in terms of terrorist attacks sustained by Middle Eastern countries and in terms of attacks perpetrated by terrorist groups based in Middle Eastern countries. Using a series of pooled, time-series negative binomial statistical regression models on 19 countries from 1972 to 2003 the analysis demonstrates that the more politically liberal Middle Eastern states—measured both in terms of democratic processes and in terms of civil liberties protections—are actually more prone to terrorist activity than are Middle Eastern dictatorships. The study demonstrates, furthermore, that an even more significant predictor of Middle Eastern terrorist attacks is the intensity of state failures, or episodes of severe political instability that limit central government projection of domestic authority, suffered by states in the region. States that are unable to respond to fundamental challenges to political stability posed by internal political strife, ethnic conflict or the phenomenon of “stateless areas,” geographic or political spaces within states that eschew central government authority, are significantly more likely to host or sustain attacks from terrorist groups. The findings have implications for current United States antiterrorism policy toward the Middle East and provide a statistical/empirical foundation to previous studies on the relationship between terrorism and state failure.     

The development and evolution of city-county management in Ireland: An illustration of central-local administrative relationships

Ireland was the first European nation to model its local governments after the American council-manager plan. Although the diffusion of the manager plan in the U.S. was slow, and at local initiative, the Irish experience was very different. The central government in Ireland imposed the manager plan on all urban districts, boroughs and counties within a short period of time. This “imposition” was designed with both political and administrative values in sight. Politically, the period immediately after independence from Great Britain was unstable and violent. A method was needed to bring order, stability and uniformity to the emerging nation. One approach was to exert central control over the activities of the one hundred elected councils in small towns, villages, boroughs and major cities. The institution of city-county manager was designed to facilitate the control by national political leaders over local authorities. Managers were appointed by the central Ministry of Local Government, were given significant administrative autonomy from local councils and were protected in their positions by national-level structures. The political values of stability, order, uniformity in the nation: building process created an environment for the emergence of new administrative values. Values of professionalism, efficiency, accountability, modernization replaced out-dated practices. An understanding of modern Ireland's experiences in local government administration may give additional insights into the active, essential role of administration in developing nations. Particularly, the role of administrators as stabilizers in conditions of political and social instability deserve our increased attention.     

Municipality size,political efficacy and political participation: a systematic review

ABSTRACT

It is an old adage that local government is a training ground for democracy. Its human scale means that political amateurs can contribute effectively and meaningfully to the politics of a state. But in a political climate seemingly driven to consolidate local government into ever larger units, can a not so local local government still elicit an efficacious and participatory citizenry? This paper explores the effect of municipality population size on two important aspects of democratic culture: political efficacy and political participation. Via a two-part systematic review, the paper examines how extant empirical literature bears on the relationship between size and both of these aspects, hypothesising that political efficacy plays a mediating role between size and participation. The findings are unequivocal: citizens of smaller municipalities feel a greater sense of political efficacy and participate to a greater degree in local politics.     

Imperial governance,sovereignty and the management of chronic instability in Africa

An important political consequence of the crisis of capital in the 1970s has been an increasing intensification of informal imperialism within Africa. This paper argues that the advanced capitalist countries again confronted the endemic problem of overcapacity alongside a decline in the rate of profit and that the major neoliberal reforms foisted upon the African continent were part of the spatio-temporal fix that followed. The quotidian management of many African states was not an intended consequence of structural adjustment, but the subsequent perturbations that beset many developing countries after following such policies has led to such a degree of institutional instability that a new form of imperial governance has come into being. Juridical sovereignty has been maintained, but political sovereignty has been severely compromised through the emergence of this neo-imperial governance. Today an array of external actors is embedded in the sinews of these states, setting the general parameters of state policy to such an extent that one can no longer speak of these countries as possessing de facto independence. The rise of these so-called ‘governance states’ and the new emphasis on ‘governance with government’ constitute a new non-territorial, political form of imperialism.     

Financial Discrepancies in Political Party Funding by Indonesian Local Government Authorities

Through different forms of decentralization variables, this study investigates Indonesian local government authorities' 2006 financial accountability reports in terms of local government authorities' contributing funds to political parties. Audit results by the Supreme Audit Body reveal that many articles were violated by these authorities in regard to the distributing, administrating, and reporting of assistance funds from them to political parties. Each rupiah committed by the 221 local government authorities involved in this study violated, on average, 1.8 articles, indicating a low level of compliance.

Critically, the study finds that administrative, fiscal, and political decentralization decreases discrepancies. The less administratively decentralized provincial authorities, where decision making is a level of government farther from the people, are more likely than non-provincial local government authorities to make discrepancies with political party legislation and regulations. Fiscally decentralized local government authorities, who earn a higher fraction of their revenue from local sources, also tend to have fewer discrepanciesFinally, politically decentralized authorities with a higher percentage of elected officials from the decentralized supporting ruling coalition, also have fewer discrepancies.     

On the Relationship between Political Science and Administrative Science in Germany

The theoretical and empirical analysis of administrative activities has been an important area of research since the establishment of political science as an academic discipline in Germany at the end of the 1960s. But is administrative science still a significant part of political science in Germany today? I argue here that in Germany a political science oriented administrative science has developed from a science focused on public administration, that is, on organizational questions, to one focused on public policies and thus on questions concerning the conditions and consequences of political problem solving and control (Steuerung). The question of the internal organization of government is increasingly regarded as an irrelevant one; in addition, the institutional promotion and funding of political science administration research has dramatically decreased since the 1970s. Today's new challenges (economization and internationalization) for both government and public administration seem to exceed the capability of political science administrative research. These challenges open up new opportunities, however, since, in the search for solutions beyond the dichotomy of market/managerialism on the one hand and traditional bureaucracy and state government on the other, political science in particular regains more importance. As will be shown, there are now tendencies which indicate that political science administrative research might encounter a stronger political demand. If the consequent research is able to find a new mixture of theory and practice, this in turn could help revitalize political science administrative research in Germany.     

Freedom of Speech and Democracy in Malaysia

This article seeks to understand the situation of political speech in Malaysia, the argument in favour of restrictions on political speech, and the problems that prevent political speech from being practised effectively. For example, two particularly sensitive issues—ethnic rivalry and religion—are considered taboo and discussion of these issues is severely restricted. Article 10 of the Malaysian Constitution, in reflecting the sensitiveness of these issues, specifies a list of restrictions, which limit the right of free speech on the grounds of guarding political stability and racial harmony. Furthermore, freedom of political speech and the political rights of individuals are secondary to the goals of national prosperity and national development, and the government is predisposed to impose some form of political discipline in order to serve the greater social good. However, the Malaysian government has taken a step further to control not only hate and racial speech, but also any political speech that seriously challenges the government. In this respect, the Malaysian government can be accused of being less democratic for its restriction on political speech.     

The Political Economy of Institutions,Stability and Investment: A Simultaneous Equation Approach in an Emerging Economy. The Case of South Africa

The modern theory of investment identifies the importance of uncertainty to investment. A number of empirical studies have tested the theory on South African time series, employing political instability measures as proxies for uncertainty. This paper verifies that political instability measures are required in the formulation of the investment function for South Africa. It also establishes that there are distinct institutional factors that influence the uncertainty variable such as property rights and crime levels. We find that rising income and property rights lower political instability, and that rising crime levels are positively related to political instability. The inference is that political instability in South Africa may not represent uncertainty directly, since it is systematically related to a set of determinants. Instead, uncertainty would have to be understood as being related to a broader institutional nexus that in concert may generate uncertainty for investors. The paper highlights the significance of getting institutions right to ensure that uncertainty is kept to a minimum by providing a predictable long-term environment. Stability at a systemic level appears crucial if investment rates are to rise in South Africa and this paper demonstrates that stability in turn is driven by a sound institutional environment that has multiple dimensions.