Relations between political stability, democracy and economic growth in post-communist countries

Abstract

The economy of the Soviet Union and other socialistic countries was almost a hundred percent dependent on politics. At the same time even the economy of the most liberal country is significantly influenced by its political environment. Relying on the features, which will be considered in detail in the research paper, it will be shown that the political environment is a factor that influences economic features of the countries in the former Soviet sphere which are in a transition period. Political stability is usually regarded as a positive characteristic and even more a desirable factor. At the same time Armenia is considered to be relatively stable in its political dimension. This paper will try to show whether there is positive relationship among democracy, economic development and political stability, i.e. whether political stability necessarily leads to democracy and economic development or may hamper them. Many studies have been conducted to reveal the relations between political environment, namely democracy, and the economic one in post-communist countries. In this paper stability will be introduced to explore the relationship between democracy and economic development, which were studied in the above-mentioned research. Here it will be studied as an independent variable to determine if it is related to either of these two variables (democracy and economic development). While political stability seems to be an undeniable prerequisite of economic growth, it may merely indicate the lack of democracy within the country. The question then is will it be negatively reflected on the economic growth and overall transition. Thus, closely tied relations may seem to exist between the countries’ political stability and economic prosperity on the one hand, and between political stability and democracy on the other hand. So, the aim of the paper is to investigate the historical experience of some transitional countries to find out if such relation does really exist, to see its magnitude and direction (if it is positive or negative). Though the paper will have descriptive and explanatory purposes as well, the main stress will be done on its explorative function that is to try to reveal the relationships between all the variables which are within the field of our interest.