This paper explores the relationship between political instability and economic growth in Egypt. The literature claims there is a relationship between political instability and economic performance. Empirical studies, however, show different results for different world regions, different countries, and different periods. Studies concerning the effect of political instability on the economic growth path are rich with cases from several countries, but do not include developing countries, such as Egypt. This paper investigates the robust relationship between economic growth in Egypt and political instability in the last five decades. We examine time-series data from 1972 to 2013, using the Cointegration approach to determine the short-term and long-term relationships. Consequently, we use an Error-Correction Model (ECM) to estimate the relationship between economic growth and political instability in Egypt. The results show that the impact of political instability on economic growth is negative and significant for all indexes of political instability used in the case of Egypt. The results have implications for policymakers who are planning for the economic growth of the country in the short- and long-term.
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The Review of Middle East Economics and Finance (RMEEF) addresses applied original research in the fields of economics and finance pertaining to the MENA region (Middle East and North Africa), including Turkey and Iran. The journal also publishes articles that deal with the economies of neighboring countries and/or the relationship and interactions between those economies and the MENA region.