TITLE:
Spatial Effect of Political Risk on Economic Growth in Africa
AUTHORS:
Oumarou Zallé
KEYWORDS:
Economic Growth, Political Risk, Spatial Spillover Effects
JOURNAL NAME:
Modern Economy,
Vol.8 No.12,
December
4,
2017
ABSTRACT: The purpose of this article is to highlight and
quantify the spatial effects of political risk on economic growth among African
countries. We design a spatial model of growth derived from the Mankiw-Romer-Weil model by introducing
spatial interactions. Spatial spillover effects occur because political risk
incurred by a country influences not only the country’s economic growth, but also the economic
growth of other geographically close countries through a spatial multiplier
effect. The econometric estimates concern a sample of 34 African countries from 1985 to 2015. Results show that the economic performance of
African countries is negatively interdependent, and the spatial interdependence passes
through political risk. It is indicated that natural resources and religious
tensions have direct negative effects on growth. On the other hand, democracy
and governmental stability have positive direct effects on economic growth but
impede the economic development of neighboring countries. However, external
conflicts are not necessarily harmful to neighboring countries. These dynamics
illustrate the complexity of conflicts and political instability in Africa.