Question

What are your views on political instability in poor countries?

Answer 1

Economic growth and political stability are inextricably linked. The uncertainty associated with an unstable political environment can, on the one hand, reduce investment and the rate of economic development. Poor economic performance, on the other hand, can lead to collapse of government and political upheaval. Political stability can, however, be achieved through oppression or by having a political party in place that doesn't have to compete for re-election. Political stability is in these cases a double edged sword. While a desideratum is the peaceful setting that political stability can offer, it could easily become a breeding ground for impunity cronyism.

Some see political stability as a condition not only preventing any form of change, but also demoralizing public opinion. Innovation and cleverness are taking a backseat. Many seek change through better opportunities in all sectors of life — politics, business, culture — in order to have a brighter future. Change is of course always risky. Yet, it's needed. Political stability can take the form of complacency and stagnation that prevents competition from happening. Competition principles don't just apply to business. In everything – political systems, education, business, innovation, even the arts – competition can be applied

For example, Vietnam is wholly controlled by the ruling party. The economy ranks among Asia's most volatile. What was once thought to be a promising economy has been in distress recently. The macroeconomy of Vietnam was relatively stable in the period 1997-2006, with low inflation, annual total output expansion of 7 to 9 percent and a moderate deficit in trade. But Vietnam was unable to weather the adverse impact of the financial turmoil in Asia in 1997-98, which partially curbed the flow of FDI into its economy. Starting at the end of 2006, both public and private firms began to experience structural problems, increased inefficiency and resource wastage.

While it is true that some African states that have achieved high growth rates are stable, there are also remarkably stable political systems in a number of relatively low performing African countries. When we talk about political stability in the context of growth, leaving aside resource-driven bubbles, we mean a particular kind of stability: the rule of law, strong institutions rather than powerful individuals, efficient bureaucracy, low corruption and a business climate-enabling investment. In fact, what we mean really is that stable governance is crucial to growth. This academic distinction is, admittedly, important to recognize. Governance goes much further than just politics