International Journal of Business and Economics Research 2019; 8(1): 14-22 http://www.sciencepublishinggroup.com/j/ijber doi: 10.11648/j.ijber.20190801.13 ISSN: 2328-7543 (Print); ISSN: 2328-756X (Online) The Impact of Political Instability on the Economic Growth: An Empirical Analysis for the Case of Selected Arab Countries Khadiga Elbargathi * , Ghazi Al-Assaf Business Economics Department, Faculty of Business, University of Jordan, Amman, Jordan Email address: * Corresponding author To cite this article: Khadiga Elbargathi, Ghazi Al-Assaf. The Impact of Political Instability on the Economic Growth: An Empirical Analysis for the Case of Selected Arab Countries. International Journal of Business and Economics Research. Vol. 8, No. 1, 2019, pp. 14-22. doi: 10.11648/j.ijber.20190801.13 Received: January 2, 2019; Accepted: January 24, 20198; Published: February 21, 2019 Abstract: This study investigates the impact of political instability on the economic growth in Egypt, Jordan, Lebanon, and Tunisia for the period of 1996-2016. The study examines the existence of the long-run relationship between different five political indicators and the growth of the economy. The study utilized panel data analysis, using annual data covering the period of 1996-2016, for the four selected Arab countries. The empirical results of the study, using the Vector Error Correction Model (VECM), highlight the impact of different political instability indicators on economic growth. Moreover, these results indicate that there is a strong long-run relationship between the several political indicators upon the economic growth. More specifically, the results show that the control of the corruption and the rule of law indicators have the highest impact on the economic growth, while the regulatory quality has the lowest. Keywords: Political Instability, Economic Growth, Arab Countries, Panel Cointegration 1. Introduction The world in general constantly faces economic and political transpositions. In particular, several economic cycles of Arab countries have witnessed satisfied movements, while others have remained poor and declined according to the huge numbers of their citizens. Alternatively, political stability plays a remarkable role in the country’s economic evolution; as the stability of the government system, which can be achieved through low rates of structural and economic changes; provides a comfortable environment which enhances the investors and economists to practice and execute their activities. While an instable political system could seriously restrain all of the above and hinder economic efficiency. No doubt, Arab spring was one of the unprecedented seasons in the Arab world; which resulted in an unforgettable experience for all Arab societies. The revolution in Tunisia was the spark in 2011, which gave the green light to other Arab countries such as Egypt, Libya, Syria, and Yemen to follow the same steps [1]. Modern theories of political economy propose that political instability (PI) dominates the economics of many Arab countries, therefore, the presence of the fluctuating in the policy decisions and goals consider as poor indicator to the government of such a country; as it has been stated in the theoretical framework of the modernistic economy, as a result, this kind of unsecured government can be a cause of domestic troubles, which indirectly can influence the economic outcomes in the country through the linkage among the economic efficacy rates, and the current policies, in addition to the way of how the polity implement them [2]. Moreover, the positive alteration in the country’s economy accomplished by the welfare policies and the improvement priorities that governments set for their society. In brief, where there is good politics there is good economics. The connection between PI and macroeconomic variables still remains in the center of the scholarly debates since it is one of the continuing relationships in the social and political economies. Furthermore, this type of correlation has been an