Economic Growth and Political Instability

According to the conventional wisdom, the likelihood that a country will suffer various forms of political instability rises sharply when economic growth is slow and declines when growth is fast. Although this view is widely held, it has not been subjected to a great deal of careful empirical analysis, and evidence from prior studies does not unambiguously support it. Using statistical models with smoothing splines and multiple lags to allow for nonlinear and dynamic effects, this paper re-examines the relationship between economic growth and various forms of political stability: social unrest, civil-war onset, coups d’etat, and transitions to and from democracy. Some of our findings are surprising. Consistent with the conventional view, we find that the rate of civil protest and the risk of coup attempts in democracies rise during periods of slow economic growth. Contrary to conventional expectations, however, we find that the effects of economic growth on the risks of civil violence, civil-war onset, coup attempts in autocracies, and transitions to and from democracy are nonlinear, and that risks are generally highest during periods of fast, not slow, growth. We also show that GDP growth is a poor predictor of nearly all of these forms of political instability. Taken together, these findings suggest that the effects of short-term economic growth on prospects for political stability are both less powerful and more complex than is widely presumed.