IMPACTS OF POLITICAL INSTABILITY ON THE ECONOMY OF PAKISTAN, SRI LANKA AND BANGLADESH

Abstract

This Paper explores the relationship between political instability and Per capita GDP growth in a sample of three countries Bangladesh, Pakistan and Sri Lanka for last 10 years. We define political instability as the prosperity of a government collapse and we estimate a model in which political instability and economic growth are jointly determined. the main result of this paper is that in countries and time periods with high prosperity of government collapse, growth is signifies lower than otherwise. This effect remains strong when we restrict own definition of government change to cases of substantial changes of the government.