Political Instability and Growth: The Central African Republic
IMF Working Papers, May 1, 2004
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- Political Instability and Growth: The Central African Republic
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Bibliographic details
- Authors: Dhaneshwar Ghura, Benoît Mercereau
- Published: May 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451850338.001
Summary findings and empirical results
- The paper provides empirical evidence that the propensity for political instability in the Central African Republic (C.A.R.) has been increased by low tax revenues and deteriorations in the terms of trade.
- The direct effect of political instability on economic growth is not statistically significant once account is taken of:
- domestic investment, and
- economic growth in neighboring countries.
Policy implications and recommendations
- Mobilization of domestic revenues to pay public employees' salaries and provide basic social services would lower the probability of coups.
- Economic diversification would reduce the propensity for adverse terms of trade shocks to fuel coups.
- Neighboring countries' efforts to resolve conflicts and achieve sustained growth would be beneficial for the C.A.R.'s economic performance.
Subject areas and keywords
- Subject: Civil service, Natural resources, Real effective exchange rates, Real exchange rates, Terms of trade
- Keywords: C.A.R. economy, terms of trade shock, WP