Political Instability and Growth: The Central African Republic

May 1, 2004

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Dhaneshwar Ghura, and Benoît Mercereau. Political Instability and Growth: The Central African Republic, (USA: International Monetary Fund, 2004) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This 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. The policy implications are: (i) mobilization of domestic revenues to pay public employees' salaries and provide basic social services would lower the probability of coups; (ii) economic diversification would reduce the propensity for adverse terms of trade shocks to fuel coups; and (iii) neighboring countries' efforts to resolve conflicts and achieve sustained growth would be beneficial for the C.A.R.'s economic performance.

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

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/080
Stock No:

WPIEA0802004
ISBN:

9781451850338
ISSN:

1018-5941

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