THE RELATIONSHIP BETWEEN POLITICAL INSTABILITY AND ECONOMIC GROWTH: PANEL CAUSALITY ANALYSIS FOR MENA COUNTRIES

There is a strong and bilateral relationship between the economy and politics. Therefore, political variables are often included when analyzing economic performance. One of the most important political variables is political instability. If an assessment is made in terms of political instability, it is seen that one of the most unstable region in the world is the MENA region. When considering the volume of oil reserves and the amount of production that they have, the political instability in the region is also a big issue for the world economy. The aim of this study is to investigate the causality relationship between political instability and economic growth in MENA countries. For this purpose, a survey covering the 1991-2016 periods was conducted for 14 selected MENA countries. In the study, Internal and external conflict indices published by the ICRG.as a political instability indicator were preferred and bootstrapped panel Granger causality test developed by Kónya (2006) was used. According to the findings, except for Iran and Israel, there are single and twofold causal relationships among the variables