The impact of political stability on sustainable economic growth in the CEMAC zone: An econometric analysis with panel data

Abstract

This paper examines the effect of political stability on sustainable economic growth (SEG). To do so, many variables have been examined in the literature as determinants of institutional quality, including political stability. Political stability plays an essential role in the process of economic growth and innovation by improving the social well-being of countries, directly influencing their SD. This reading is important with the renewed interest in the quality of institutions in the explanation of economic performance, especially after the decline of microeconomic analyses, notably in the framework of endogenous growth theory, transaction cost theory, agency theory and the new institutional economics (Kouchad et Dinar, 2020). The latter having shown their limitations in the study of such a complex phenomenon, justify that its factors contribute to the explanation of the link between political stability and sustainable growth. The empirical analysis is conducted in a dynamic panel on a probability sample of CAEMC countries using annual data from 1995 to 2020. With the double least squares (DLS) method applied, the results obtained suggest that: political stability has a positive and significant effect on ESC in the CAEMC zone. This study indicates that the economic stakes remain high, but the responses provided by institutions must be informed and respect social and environmental constraints in order to be sustainable and contribute to a growth in current wealth that does not obliterate the choices of future generations. We therefore support the idea that for a country to develop, it must both improve its institutions and that these institutions are interdependent and function similarly within the same country.

Keywords: sustainable development, political stability, sustainable economic growth and CAEMC

Classification JEL: B52 O43, O47.

Paper type: Empirical research.