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The Cost of Political Instability The Case of Guinea-Bissau

The Cost of Political Instability The Case of Guinea-Bissau . Jose G. Ramos jr7394a@american.edu American University School of International Service. Guinea-Bissau? . Located in West Africa Population: 1.6 Million Former Portuguese Colony Independence: 1974 Democracy: 1994

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The Cost of Political Instability The Case of Guinea-Bissau

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  1. The Cost of Political InstabilityThe Case of Guinea-Bissau Jose G. Ramos jr7394a@american.edu American University School of International Service

  2. Guinea-Bissau? Located in West Africa Population: 1.6 Million Former Portuguese Colony Independence: 1974 Democracy: 1994 HDI 2012: 176/186

  3. Research Question & Hypotheses • Question? • In the case of Guinea-Bissau, is there a correlation between GDP per Capita and Political Instability & Freedom? • Hypotheses! • H0: There is no relationship between GDP per Capita and Political Instability & Freedom! • H1: There is a correlation between GDP per Capita and Political Instability & Freedom!

  4. Literature Review • Collier & Hoeffler (1998) • Theory: Conflict Trap • On average countries in conflict experience lower GDP per Capita. • Growth in GDP per capita decreases chances of conflict. • Barro (1999) & Acemoglu, Johnson, Robinson & Yared (2008) • Theory: Income & Democracy • “One of the most notable empirical regularities in political economy is the relationship between income per capita and democracy.”

  5. Data Description • Unit of Analysis: Country – Time Series Analysis (1974-2012) • Source of the Data: World Bank, Freedom House, UNDP & KOF Globalization Index • Reliability of the data: • Secondary data • Difficult to get statistics on Guinea-Bissau • Dependent variable: • Y is GDP per Capita in PPP • Unit of measurement: Annually; LOM: Interval-ratio • Independent Variable • X1 is Political Instability; years of instability (conflict, coups attempts/coups, suspension of parliament) LOM: nominal (Binary: Years of Peace=0 & Years of Instability=1) • X2 is Freedom Rating– Freedom of the World (Reversed: 1=Least Free, 7=Most Free)

  6. Descriptive Statistics Average GDP from 1974 to 2012 - $966.73 Histogram shows almost normal distribution - small dispersion Mean is a good indicator of central tendency

  7. Multivariate Analysis

  8. Findings & Policy Implications • In Guinea-Bissau political instability is correlated with GDP per Capita. • During years of instability, GDP per Capita was $108.02 less • Level of freedom though does not appear to be associated with GDP per Capita. • Peace & political stability is important in Guinea-Bissau • Government need to do more to ensure stability • Economic growth will occur with political stability • There are many factors impacting GDP per Capita FURTHER RESEACRH NEEDED!

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