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ISET Economist Blog

A blog about economics in the South Caucasus.

Political Instability in Fragile Democracies

Free Policy Briefs has an insightful post on political instability in Kyrgyzstan.

The literature, typically using panel data covering many countries, shows that higher government turnover rates reduces growth significantly in both economic and statistical terms, even for established democracies. Looking at government turnover in more polarized societies and unconstitutional change in power (revolutions and coups), the effect is estimated to be even larger.

Is this relevant for Georgia? Only the future will show.

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Guest - Eric on Friday, 19 October 2012 04:01

This reference to the "literature" (Tolstoy?) does not make any sense. The link cannot be linear. Too little government turnover can be as bad for growth and welfare as too much of it. Following the Laffer curve logic, there is an optimal level of goverent turnover. At this level, say, once in 5 years, the government is kept accountable while having a sufficiently long term view to plan and execute reforms.

This reference to the "literature" (Tolstoy?) does not make any sense. The link cannot be linear. Too little government turnover can be as bad for growth and welfare as too much of it. Following the Laffer curve logic, there is an optimal level of goverent turnover. At this level, say, once in 5 years, the government is kept accountable while having a sufficiently long term view to plan and execute reforms.
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