Type: Analysis
Pages: 4 | Words: 1136
Reading Time: 5 Minutes

The question of whether political instability has effects on economic growth has raised a series of debates from economist, the political class as well as political scientists. Prior studies had suggested that there was no profound relationship whatsoever. This paper will examine political instability relations with economic growth (Dowlatabadi, 271). Empirical methods are to be used to illustrate the relationship. Economist are trying to understand whether economic success depends on stability in the political environment or if economic development is the foundation ensuring political stability is maintained.

Policy analysis is defined as the determinant which help achieve a number of given set of goals in relations light between policies and goals. Nevertheless, there are two major fields which are appropriate to make a policy analysis (Dowlatabadi, 271). The analysis is said to be descriptive and analytical e.g. it tends to explain the policies and their development. It is also prescriptive whereas, it is concerned with formulation of proposals and policies, such as improving social welfare. The policy analysis area of interest and its purpose determine the type of analysis conducted. This is a combination of the policy analysis together with the program evaluation defined as policy studies.


The policy analysis is to be methodologically diverse through the use of both quantitative and qualitative methods that include survey research, case studies and statistical analysis among others. One of the most common methodologies is evaluation of criteria and defining the problem; alternatives identifying; evaluating them and also recommends the best of policy agenda per favour.

Policy analysis approaches

Policy analysis has many approaches that exist, nevertheless, the three general approaches are: analycentric approach, policy process and meta-policy approach.

Analycentric approach

This approach focuses on the individual problems and gives the solutions to the problems. Micro-scale is its scope and its interpretation of problems is usually of technical nature (Sidney, 47). Its main aim is identifying the most efficient and effective solution in economic and technical terms (e.g. efficiency when allocating resources).

Policy process

This approach puts the focal point onto the political processes, which involve stakeholders; Meso-scale is its scope and political nature is usually its interpretation problem. Its main aim is to determine the means and the processes used and also tries to explain the part or role played and influence of stakeholders in the policy process (Sidney, 47). It is through changing the relative influence and power of a certain group or groups, such as enhancing public consultation and participation, there is identification of problems and solution.

Meta-policy approach

This is a context and system approach; macro-scale is its scope and the interpretation of problem is usually of a structural nature. It targets on explaining the contextual factors of policies and process, for instance, what are economic, political and socio-cultural factors that influence it. Many problems occur because of structural factors, such as certain political institutions or economic system; the solutions might entail structure changing.

Analysis of the effects of political instability on economic development

According to economist across the world, political instability results in serious malaise that could destroy the economic state of any country. The most likely result of political instability is that it lowers the horizons of policymakers, hence resulting in macroeconomic policies that are suboptimal. This state could result in policy changes, which lead to volatility thus poor economic performance. The repercussion of political instability on various economies across the world is pervasive and surprising. Several economists across the world are interested in understanding the political instability phenomenon in various parts of the world. Some economists have stated that there is a dual effect resulting from political instability. However, this paper will focus on the affects of political stability on various macroeconomic variables some of which are inflation rates, levels of private investment and GDP growth rate.

GDP levels are significantly low in the case of countries that face a high propensity of having their governments fail. A country that faces a high degree of instability in its political environment will experience low economic growth. Consequently political instability results in high levels of inflation. The levels of economic growth and inflation in regard to political stability can be explained by political instability which is a result of shortening of the government`s horizons and economic policies. Private investment is hampered due to high risks associated with undertaking an investment project. This in turn lowers the levels of investment. In analyzing how political instability impacts on economic growth rate the with GDP factor in mind we should note that the total productivity of a country translates to over half the level of GDP. Hence, if political instability affects total product, it will mean that over half of a country`s GDP is affected. This results in poor economic performance.

Other than political instability affecting economic levels it also affects human capital as well as physical capital. However, it has a significantly larger effect on human capital (Bardach, 64). Consequently, effects of instability on human capital translate to effects on economic growth. For continuous uninterrupted economic growth countries should address the issues resulting in instability. To address this comprehensively governments should identifying the root causes of political instability and finding ways to mitigate the effects resulting from it. This would ensure economic sustainability and growth (Bardach, 64).

Political stability affects labor supply and productivity. If the state of political environment is unstable, people will not be willing to provide their labor services. Lack of labor results in low in low productivity hence the making the economy stagnate. Inadequate labor results in poor total product levels, which lowers the country’s GDP levels.

As indicated above, political instability is principally a measure of the sum total of the general unrests and strikes often instigated by political actors. Other instigators are demonstrations, riots as well as government longevity. The last aspect that defines political instability is the government change. In the latter, key components include wars, military coups as well as regime type. To ascertain the objective of this study, all the aforementioned parameters are key variables that underlie political instability in any given context; in this regard, underpinning the crises in the Middle East as an example. It is, however, vital to explain the basis of considering such variables as critical. Essentially, these variables do not only capture political unrests, but equally express the impact such instabilities present on the economic growth of a country; as recapped in the table above.


The political environment of a country affects the economic growth at a certain period of time. If the environment is unstable characterized by war and tension, economic growth will stagnate. This is due to no investment projects being undertaken by investor as fear to fail leading to losses (Vining, 13). A stable political environment is conducive for continuous economic growth as well as serving as an opportunity to attract investors. All governments across the world should strive to have a calm and peaceful environment.

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