Political Instability and Corruption Sample Clauses

Political Instability and Corruption. Another key difficulty concerning economic growth and promoting market competition in developing countries is unstable governments and the resultant volatile economic policies. 69 For a detailed account of political influences on competition law enforcement and the ways to address their adverse effects, see (Gal, 2002b). 70(X. Xxxxxxx & Xxxxxxxx, 2004), p. 458. As a general note, however, the authors indicate that ‘[government interventions] are second order relative to ensuring a stable macro-economic environment and an institutional infrastructure that supports the functioning of modern markets in general.’ Likewise, (Xxxxxx, 2013) explains that ‘Without some semblance of macroeconomic stability and property rights protection, new industries cannot emerge. (…) [However] fostering new industries often requires second- best, unconventional policies that are in tension with fundamentals. When successful, heterodox policies work precisely because they compensate for weaknesses in those fundamentals’ (ibid., p. 5, see also pp. 29-35). 71(Xxxxxxx, 2001), pp. 271-2. 72(Xxxxxxx, 1997), pp. 421-2. There are plenty of econometric studies that examine the relationship between unstable governments and economic development. Although the factors considered in assessing the instability of governments varies across the respective studies, there seems to be a broad consensus on the negative influence of political instability (including government change and other factors that lead to exorbitant changes in political tendencies) on economic growth. 73 This adverse influence may partly be explained by dramatic economic policy amendments that often follow government replacements. When political instability leads to extreme economic policy change it is likely to have a cost on the credibility of the investment environment in the respective country for private investors. Depending on historical and contemporary political tendencies within a (developing) country, instability of government may trigger private investors’ fears of facing expropriation, significant market access restrictions or other kinds of extreme measure, and thereby losing the value of their investments. In addition, unstable government and resultant volatile economic policies may obstruct the continuance of previously scheduled large investments in public services such as infrastructural improvements, when a newly appointed government decides its public policy priorities differently. The inability of governme...