Lssays on Political Instability:

Mea.vrevevt, Cav.e. ava Cov.eqvevce.

Richard Jong-A-Pin



























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Richard Jong-A-Pin

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Lssays on Political Instability:
Mea.vrevevt, Cav.e. ava Cov.eqvevce.


Proefschrift


ter erkrijging an het doctoraat in de
Lconomie en Bedrijskunde
aan de Rijksuniersiteit Groningen
op gezag an de
Rector Magniicus, dr. l. Zwarts,
in het openbaar te erdedigen op
donderdag 5 juni 2008
om 13.15 uur




door



Richard Marcel Jong-A-Pin

geboren op 3 september 1980
te Groningen

Promotor: Pro dr. J. de laan


Beoordelingscommissie: Pro. dr. B.\. Lensink
Pro. dr. 1.J. \ansbeek
Pro. dr. J. Crespo-Cuaresma
i
Acknowledgments


1he brae ones among you are about to read my PhD. thesis. It consists o a
collection o papers on political instability that I wrote during the period
September 2003 - January 2008 at the department o Lconomics and
Lconometrics o the Uniersity o Groningen. lrankly, it is quite unair to
speak o my` and I` as many people hae contributed to this dissertation. I
am proud that I hae had the opportunity to interact with many bright
colleagues, who ound it worthwhile to cooperate, share their ideas, proide
help, gie comments, ., join or coee, lunch, or a beer. O course, in these
acknowledgments I could laud them using brilliant and original metaphors, or
dull and sentimental clichs, but I won`t. Instead, I rather use one word to
express my gratitude: 1hanks!

In particular, I would like to thank:

Jakob de laan or guiding me through academia. lis style o managing my
project by giing me carte blanche to explore my own interests, while giing
meaningul adise numerous times, deseres a lot o respect.

Kees Bouwman or being a hilarious roommate and a marelous
econometrics encyclopedia, which helped me surie the early stage o the
PhD. trajectory.

Dirk Bezemer, Martin Gassebner, Jakob de laan and Jochen Mierau, or our
collaboration on the research projects ,partly, represented in this thesis.

1he members o the ealuation committee, Jesus Crespo Cuaresma, Robert
Lensink and 1om \ansbeek, or their willingness to read the entire
manuscript.

Robert Inklaar or his help with many things ranging rom programming
diicult statistical tests to inding the magic button in Lxcel to change
comma`s into decimal points. I am ery proud that our Business Cycle
Synchronization project resulted in a Luropean Lconomic Reiew article.

Gaaitzen de Vries and Jutta Bolt or the many discussions on economic
growth and institutions.

ii
Paul Bekker, Ryanne an Dalen, Lwout lrankema, Csar Garcia Diaz,
Johanneke lenstra, Simon de Jong, Ruud Koning, Lydian Medema, Mark
Mink, Marian Oosterhuis, Janneke Pieters and all other colleagues o the
Lconomics and Lconometrics department, the International Lconomics and
Business department, and the SOM Research School. 1here was hardly a day
that I did not hae un at work ,see also stelling 12`,.

Jan Lgbert Sturm and his sta o the Konjunkturorschungstelle ,KOl, at
the L1l Zurich or initing me to work as a guest proessor` at their
institute, and or their hospitality during my stay in Zurich. Chapter 5
illustrates that my isit was ery worthwhile.

Apart rom my colleagues, I would like to thank:

1iny lingstman or sorting out a lot o practical matters in the last couple o
years.

My parents, Anneke and Marcel, or being there when needed.

Mark Bossinga, lerman Lillert, Oscar Leuenkamp, Pascal Roemers, Roy
Veroort, Bram Stienstra and Io Stienstra or being great riends with an
extraordinary ability to talk about sports and other less serious matters.

And then, there is one person let that ought to be thanked: Llira! I better
not start writing mawkish phrases to express my debt o gratitude and loe
or her, because this would probably take a noel.

\ours truly,

Richard
Groningen, 23 April 2008










iii

Contents


Acknowledgments................... i

Contents....................... iii

J. Introduction.................... J

1.1. Introduction..................... 1
1.2. Measuring political instability..............3
1.3. Political instability and economic growth........... 4
1.4. Democracy, globalization and ethnic iolence......
1.5. 1errorism and cabinet instability........... 8
1.6. Outline.......................10


Part I Political instability and economic growth

2. On the measurement of political instability and its impact on
economic growth

2.1. Introduction..................... 15
2.2. lactor analysis..................1
2.3. Data and actor analysis results.............. 19
2.4. Political instability: some descriptie statistics...... 25
2.5. 1he impact o political instability on economic growth.... 31
2.6. Robustness analysis................ 35
2.. Conclusion.................... 39
2.A. List o political instability indicators, deinitions and sources. 43
2.B Descriptie statistics.................. 45


3. Political regime change, economic reform, and growth
accelerations

3.1. Introduction..................... 4
iv
3.2. Identiying growth accelerations............ 49
3.3. Lmpirical analysis.................. 59
3.4. Robustness analysis................ 65
3.5. Conclusion....................69


Part II Causes of political instability

4. World on fire? Democracy, globalization and ethnic violence

4.1. Introduction..................... 3
4.2. Related literature................. 5
4.3. Data and method...................
4.4. Lstimation results................... 84
4.5. Robustness analysis................ 91
4.6. Conclusion....................95
4.A. Countries with and without a MDM according to Chua...96
4.B. Countries with and without a MDM according to MAR...98
4.C. Descriptie statistics..................100


S. 1errorism and cabinet instability

5.1. Introduction..................... 101
5.2. Related literature................. 103
5.3. Data and method.................... 105
5.4. Lstimation results...................114
5.5. lurther analysis................... 11
5.6. Conclusion.................... 124


6. Conclusion....................... 125

References....................... 131

Samenvatting (summary in Dutch)............. 145