Long Live Democracy Research Paper
Long Live Democracy: The Determinants of Political
Instability in Latin America
Luisa Blanco*
Department of Economics
University of Oklahoma
Norman, OK 73019 lblanco@ou.edu Robin Grier
Department of Economics
University of Oklahoma
Norman, OK 73019 rgrier@ou.edu Abstract
In this paper, we investigate the determinants of political instability in Latin America. In a panel of 18 Latin American countries from 1971 to 2000, we find that democratic countries experience less average instability in the region, indicating that the move to increased democracy in the last couple decades may alleviate the persistent problem of instability in the area. We also find that income inequality and ethnic fractionalization are important determinants of instability. …show more content…
11 We then sum, by category, the number of unstable events that occurred in each country over a 5 year period. As our three dimensions of political instability are likely to be highly correlated, we then take the principal component of these three categories as our measure of political instability. 12
Table 1 shows the average (and ranking) of our index of political instability for the individual countries in our sample, where larger numbers are associated with greater instability. Based on our measure of instability, the four most unstable countries are
Argentina, Guatemala, Bolivia, and Colombia while the four most stable are Panama,
Honduras, Paraguay, and Costa Rica. While the unstable group had at least twice as many unstable events as the stable group in each individual measure of
Instability in Latin America
Luisa Blanco*
Department of Economics
University of Oklahoma
Norman, OK 73019 lblanco@ou.edu Robin Grier
Department of Economics
University of Oklahoma
Norman, OK 73019 rgrier@ou.edu Abstract
In this paper, we investigate the determinants of political instability in Latin America. In a panel of 18 Latin American countries from 1971 to 2000, we find that democratic countries experience less average instability in the region, indicating that the move to increased democracy in the last couple decades may alleviate the persistent problem of instability in the area. We also find that income inequality and ethnic fractionalization are important determinants of instability. …show more content…
11 We then sum, by category, the number of unstable events that occurred in each country over a 5 year period. As our three dimensions of political instability are likely to be highly correlated, we then take the principal component of these three categories as our measure of political instability. 12
Table 1 shows the average (and ranking) of our index of political instability for the individual countries in our sample, where larger numbers are associated with greater instability. Based on our measure of instability, the four most unstable countries are
Argentina, Guatemala, Bolivia, and Colombia while the four most stable are Panama,
Honduras, Paraguay, and Costa Rica. While the unstable group had at least twice as many unstable events as the stable group in each individual measure of