The Unassuming Economist

From a paper by Floris Bukman:

“Military coups are a persistent feature of global politics, with nearly 90 incidents recorded worldwide between 1996 and 2023, particularly in Sub-Saharan Africa and Asia. Such events typically disrupt economic performance, causing declines in GDP growth, high inflation rates, reduced foreign direct investment (FDI), and increased unemployment. However, the severity and duration of these economic outcomes vary significantly across countries. This thesis addresses this gap by investigating whether institutional quality, measured by government effectiveness, moderates the short- to medium-term economic impacts of coups. Using a fixed-effects panel regression model covering all UN member states from 1996 to 2023, the findings suggest that countries with stronger institutions are better able to mitigate the typically negative economic effects of coups. These countries experience faster GDP growth recoveries, particularly evident in the second year after the coup and, in some contexts, as early as the first year. For inflation, FDI, and unemployment, the moderating effect of institutional quality was not statistically significant. By emphasising the important role of institutional quality following political instability, this research provides new insights into why some countries experience less severe economic impact and recover more quickly from military coups than others, and it offers directions for future research.”