Political instability and political terror: Global evidence on persistence

• Author: Joseph I. Uduji,Elda N. Okolo‐Obasi,Simplice A. Asongu
• Date: 01 August 2020
• Published date: 01 August 2020
• DOI: http://doi.org/10.1002/pa.2119

ACADEMIC PAPER

Political instability and political terror: Global evidence on

persistence

Simplice A. Asongu

1

| Joseph I. Uduji

2

| Elda N. Okolo-Obasi

3

1

African Governance and Development

Institute, Yaoundé, Cameroon

2

Department of Marketing, Faculty of

Business Administration, Enugu Campus,

University of Nigeria, Nsukka, Nigeria

3

Institute for Development Studies, Enugu

Campus, University of Nigeria, Nsukka, Nigeria

Correspondence

Simplice A. Asongu, African Governance and

Development Institute, PO Box 8413,

Yaoundé, Cameroon.

Email: asongusimplice@yahoo.com, asongus@

afridev.org

We test the hypotheses that fundamental characteristics in regional proximity,

landlockedness, religious-domination, legal origin, and income levels affect cross-

country differences in the persistence in political terror and political instability in

163 countries for the period 2010–2015. The empirical evidence is based on general-

ised method of moments. The hypotheses are that the following are associated with

comparatively higher levels of persistence in political terror and political instability:

regions with predominantly low income countries (Hypothesis 1); landlockedness

(Hypothesis 2); Christian-orientation (Hypothesis 3); French civil law (Hypothesis 4);

and Low income (Hypothesis 5). The tested hypotheses are largely invalid. Only

Hypotheses 5 and 2 are robustly investigated in the light of concerns about instru-

ment proliferation. Hypothesis 2 is valid for political terror but not for political insta-

bility while Hypothesis 5 is neither valid for political instability nor for political terror.

1|INTRODUCTION

A June 2015 Global Peace Index (GPI) report maintains that more

than 13% of global Gross Domestic Product (GDP) is spent on costs

related to violent activities (Anderson, 2015). In the light of the report,

in 2014, approximately $14.3 trillion (or exactly 13.4% of the world's

GDP) was spent on fighting, inter alia: political instability, violence and

crimes. To put this point into perspective, the highlighted cost is the

equivalent to the total annual output of Brazil, Canada, France, Ger-

many, Spain and the UK.

It is relevant for policy to be informed about factors that favour

the persistence of political instability and political terror because

according to the GPI (2016), terrorism and political instability are esti-

mated to increase in the coming years. Accordingly, terror networks

have considerably increased in operational scope. This is essentially

because terror-related violence accounted for a significant percentage

of killings in 2014, compared to 2008. It is also important to note that

the diversion of resources that otherwise would have been used to

address socio-economic needs (in the light of the post-2015 develop-

ment agenda) are used to fight political ‘terror/instability’-related

issues. This concern is even worrisome to policy makers because polit-

ical instability and political terror in 2014 resulted in the highest num-

ber of internally displaced persons recorded since World War II

(Asongu & Kodila-Tedika, 2017). The choice of the two political

concepts is based on an intuitive conceptual similarity and not moti-

vated by prior empirical evidence.

1

In the light of the above, this study assesses the persistence of

political instability and political terror. The concept of persistence

which is consistent with the attendant literature (Asongu, 2018) is

understood in relation to the manner in which previous observations

of political instability and political terror influence future observations

of political instability and political terror, respectively. “From an empiri-

cal perspective, the hypothesis of persistence can be investigated with a

dynamic estimation approach. Such a dynamic technique is the general-

ized method of moments (GMM) that has been employed in the recent lit-

erature to investigate persistence in economic phenomena”(Asongu,

2018, p. 137). In order to provide room for more policy implications,

the dataset is disaggregated based on income levels, legal origins,

regional proximity, religious domination and landlockedness. The posi-

tioning of this inquiry deviates from recent literature which has funda-

mentally focused on: (a) assessing channels by which conflicts,

political instability, political terror and crimes can be prevented and

curbed and (b) investigating the relationships between violence, politi-

cal instability and macroeconomic indicators. We expand the

highlighted strands in chronological order.

In the first strand, some recently documented channels through

which political terror, political instability, crimes and conflicts can be

mitigated include: the importance transparency (Bell, Clay, Murdie, &

Received: 18 October 2019 Revised: 23 December 2019 Accepted: 9 March 2020

DOI: 10.1002/pa.2119

J Public Affairs. 2020;20:e2119. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons, Ltd 1of16

https://doi.org/10.1002/pa.2119

Piazza, 2014); respect of the rule of law (Choi, 2010); the relevance

freedom of the press and publicity (Hoffman, Shelton, & Cleven,

2013); the role of global warming (Price & Elu, 2016); policy harmoni-

zation for the fight against terrorism (Asongu & Nwachukwu, 2018);

use of military strategies and tactics (Feridun & Shahbaz, 2010); effec-

tive governance tools in curtailing crimes and conflicts (Asongu &

Kodila-Tedika, 2016); the importance of education channels

(Brockhoff, Kieger, & Meierrieks, 2015) like enhancement of bilingual-

ism (Costa, Hermandez, & Sebastian-Gallés, 2008) and lifelong learn-

ing (Asongu & Nwachukwu, 2016a) and the imperative for

behavioural analysis on the motivations for terrorism (Gardner, 2007).

The second strand has focused on examining the relationships

between political terror, political instability and macroeconomic fac-

tors. Studies within this strand include: the terrorism-innovation nexus

(Koh, 2007); the role of natural resources (Humphreys, 2005); the

effect of terrorism on foreign direct investment (FDI) (Abadie & Gar-

deazabal, 2008); the terrorism-growth relationship with bidirectional

(Gries, Krieger, & Meierrieks, 2011; Shahbaz, Shahbaz, Nasir, &

Edward, 2013; Shahzad, Zakaria, Rehman, Ahmed, & Fida, 2015) and

unidirectional flows (Choi, 2015; Gaibulloev & Sandler, 2009;

Meierrieks & Gries, 2013; Öcal & Yildirim, 2010; Piazza, 2006) and

the relevance of development assistance in dampening the negative

effect of terrorism on FDI (Bandyopadhyay, Sandler, & Younas, 2014;

Efobi, Asongu, & Beecroft, 2015).

The rest of the study is structured as follows. Section 2 discusses

the theoretical underpinnings, the intuition and corresponding test-

able hypotheses. The data and methodology are covered in Section 3

whereas Section 4 presents the empirical results. Section 5 concludes

with implications and future research directions.

2|THEORETICAL UNDERPINNINGS,

INTUITION AND TESTABLE HYPOTHESES

2.1 |Theoretical underpinnings

The theoretical background for persistence in political terror and polit-

ical instability is consistent with recent literature on persistence in the

banking sector (Goddard, Liu, Molyneux, & Wilson, 2011; Stephan &

Tsapin, 2008) and inclusive development (Asongu & Nwachukwu,

2017a). This theoretical background builds on the literature on per

capita income catch-up which has been considerably documented

within the theoretical and empirical growth frameworks (see Barro,

1991; Barro & Sala-I-Martin, 1992, 1995; Baumol, 1986; Mankiw,

Romer, & Weil, 1992). This theoretical underpinning on convergence

has recently been extended to other economic development fields,

notably: financial markets (Asongu, 2013; Bruno, De Bonis, &

Silvestrini, 2012; Narayan, Mishra, & Narayan, 2011); inclusive devel-

opment (Asongu, 2014; Mayer-Foulkes, 2010) and policy harmoniza-

tion in the fight against terrorism (Asongu & Nwachukwu, 2018). It is

relevant to emphasize that the objective of articulating that the theo-

retical underpinnings of the convergence theory have been used in

many economic development areas (financial markets, inclusive

development, etc.) is to motivate the extension of the theoretical

underpinnings of the convergence theory to political instability and

political terror. Moreover, to the best of our knowledge such exten-

sion is sparse in the literature.

Note should be taken of the fact that, in the post-Keynesian

époque, nascent economic theories were fundamentally motivated by

the surge in neoclassical revolution that provided enabling conditions

for decreasing income variations across countries. Hence, the assump-

tion of decreasing variations in wealth across countries was a funda-

mental basis of economic growth theories which advocated free

market competition as a facilitator for such convergence (Mayer-

Foulkes, 2010). Seminal papers which concluded on evidence of

divergence (i.e., the lack of convergence) substantiated the finding by

raising various inherent features that inhibit the process of catch-up

among nations, notably: differences in initial conditions of develop-

ment and the likelihood of multiple equilibria (Barro, 1991; Pritchett,

1997). Conversely, there is a contending strand in theoretical litera-

ture which argues that regardless of disparities in initial development

conditions, decreasing variations in income levels across countries can

be feasible within the framework of countries' common steady state

or long run equilibrium (Asongu & Nwachukwu, 2017a).

Noticeable in the above two conflicting schools in the theoretical

literature is that the criteria for assessing convergence is not uncom-

mon. Hence, the purpose of this inquiry is not to take sides in the

debate, but to leverage on the common criteria for examining conver-

gence in order to assess persistence in global political stability and

political terror.

2.2 |Intuition for comparative development and

testable hypotheses

The intuition underpinning the adoption of features defining the com-

parative development of political instability/terror builds on recent lit-

erature on comparative development (Asongu & le Roux, 2017;

Beegle, Christiaensen, Dabalen, & Gaddis, 2016; Mlachila, Tapsoba, &

Tapsoba, 2017; Narayan et al., 2011). These features include regions,

landlockedness, religious domination, legal origins and income levels.

In chronological order, we substantiate the intuition motivating the

choice of these fundamental characteristics.

First, regions with predominantly low income countries should

be more associated with greater persistence in political terror and

political instability because nations that are not wealthy have lim-

ited financial resources with whichtopreventandaddressthephe-

nomena. These arguments have been used to motivate/justify the

employment of foreign aid to mitigate the negative effects of ter-

rorism in poor countries (Asongu & Kodila-Tedika, 2017; Efobi

et al., 2015).

Hypothesis 1 Regions that predominantly consist of high income

countries experience less persistence in political instability/ter-

ror compared to their counterparts associated with countries

with averagely lower levels of income.

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