Do dictators or political instability affect growth? No!
It is often suggested that political issues have mired the progress of Frontier Markets. Frontier Markets often tend towards two extremes, immense political instability or despotic dictatorships. We thought it was worth looking at how many leaders the countries within our Frontier Markets universe have had over the past 25 years (1990 – 2015), and how long their average tenure was. This was then compared to annualized GDP per capita growth over the same time period.
The figure below looks at the # of leaders from 1990 – 2015 compared to the annualized growth for that period. You can see that there is truly no relationship between the stability of the government and a country’s growth. The reason is that for every Zimbabwe (Mugabe), there is a Qatar (Hammad).
The figure below then looks at the average tenure per leader to account for countries where one leader ruled for a long period of time, followed by short stints of instability. Here, there is even less of a relationship between stability and growth.
The table below provides each country’s figures, that the charts above are based on.
This topic is fascinating and certainly can be studied more in-depth, but we wanted to give you a brief look at the topic and provide you with some figures you can use when you are studying/analyzing the subject of political systems and economic health. We focused on GDP per capita as a way to normalize the benefit for each country.
As always, any questions, please let us know.