Abstract:

Purpose – The purpose of this study is to investigate the possible relation between political stability and economic growth in Turkey and Central Asian Turkic Republics namely, Azerbaijan, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan. By doing so, we will be able to conclude the effect of political stability on transition economies such as Turkic countries. Methodology – We employ panel data analysis methods which take cross section dependency into account. In this regard, we employ cross section dependency test and unit root tests. In the second step, we use panel unit root co-integration test. At the end we employ panel VAR causality and Köse and Emirmahmutoğlu Panel causality tests. Findings- Results imply that there is a uni-directional causality running from gross domestic product per capita to political stability. In country based analysis, it is seen that the causation linkage running from political stability to economic growth occurs in only Azerbaijan. In other countries, there is no relationship between variables. Conclusion- According to results, it is possible to conclude that political stability is not a pre-condition of economic growth in Turkic economies, except Azerbaijan. On the other hand, political stability might be a pre-condition of another macroeconomic indicator such as inflation, trade opennes and etc.

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