Do Regional Politics Matter for Regional Growth?

Lunds universitet/Nationalekonomiska institutionen 2020

This paper estimates the relationship between political instability and economic growth at the regional level. A panel of Swedish regions over the time frame 1994-2018 is used to conduct the empirical analysis. The empirical analysis consists of regressing regional growth rates in GDP per worker on a measure of political instability and a set of control variables. Growth rates are measured over a 4-year period that coincides with the election period. Political instability is measured in three different ways. That is, if the region is ruled by a minority government, if the region is ruled by an ideological mix of parties, and the number of parties ruling the regional government. An analysis at the municipal level is also conducted, where population-weighted shares of the political instability-variables and their effect on regional growth rates are investigated. The results of the empirical analysis are that political instability at the regional and municipal levels has no significant effect on regional growth rates, suggesting a weak relationship. When extending the time frame to cover 1973-2018 and investigating if regions ruled by governments with single-party majority experienced higher growth rates, a significantly positive effect at the 10%-level was found for the share of municipalities within the region with a single-party majority. This indicates that, even though results, in general, are insignificant and inconclusive, it might be worth conducting the same analysis in the future, when more data is available.

Economic growth; political instability; Sweden; regions; municipalities; Business and Economics; H2

Open access content. Open access content

application/pdf
English

LBT oai:lup-student-papers.lub.lu.se:9028377
1358358931

LUND UNIV LIBR
From OAIster®, provided by the OCLC Cooperative.

edsoai.on1358358931