Macroeconomic and Political Instabilities in Sub-Saharan Africa

The analysis uses macroeconomic models designed to capture the direct impact of political instability on macroeconomic stability, and the effect of macroeconomic instability on political stability. The model is an adaptation of the neo-classical production function with fixed-effects formulated to explore the postulated interdependencies in key sub-Saharan countries over the period 1960-1990. The estimates indicate that macroeconomic instability indices as well as unemployment and inflation are positive and significantly correlated with the political instability variable. Also, there is a significant negative relationship between political instability and the nations economic output as measured by the Gross Domestic Product (GDP). Furthermore, there is a significant positive relationship between income inequality and political instability and the marginal propensity to political violence differs across socioeconomic groups and is highest for the lowest income group. Thus, effective strategic policy responses must take into account the reasons why people turn to violent political interest articulation and aggregation including violent disintegrative nationalism. Indeed, the analysis suggests that both political and economic reforms are necessary to stabilize the political economy of sub-Saharan Africa