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Theoretical literature revie1

Theoretical literature review
The theory behind the relationship between economic conditions and politics are framed by
Acemoglu and Robinson (2013). The duo state that Suppose an economic policy has to be
chosen in both periods and there are no economic linkages between these two periods.
Likewise, assume that in the main time frame politicians have some opportunity of decision
over policy-in some sense, there is a "window of policy opportunity" with the goal that policy
isn't totally dictated by personal stakes or some political figuring. This policy decision may
likewise be affected by exhortation from economists, for instance, planned for rectifying a
market failure. In the subsequent period, strategies will be resolved in political harmony.
Let our first spotlight on the world of economics without legislative issues, with no political
(or financial) linkage between the two periods. In such a world, the first-period policy decision
can be made with no worry for the political equilibrium in the subsequent period. Nonetheless,
actual policy decisions in the first period regularly fortify a few groups and debilitate others,
and in this manner will probably influence the political equilibrium in the subsequent period.
Thus, the political equilibrium will decide the decisions made in the subsequent period.
Subsequently, the goal of the welfare-maximizing policymaker and the exhortation given by
economists ought to be to illuminate advertise disappointments today, however, they should
consider the later political implications of this first-period decision.
The argument so far is similar to a political version of the famous second-best caveat to
economic policy analysis (Lancaster and Lipsey 1956). But often, more can be said. Much
political economy analysis highlights the role of the balance of political power in society,
emphasizing in particular that (1) economic and political power are linked; and (2) the political
dominance of a narrow interest group or segment of society will have deleterious effects (for
example, Acemoglu and Robinson 2013). In this light, policies that economically strengthen
already dominant groups, or that weaken those groups that are acting as a counterbalance to
the dominant groups, are especially likely to tilt the balance of political power further and have
unintended, counterproductive implications. Moreover, monetary changes that leave the basic
political and institutional wellsprings of wasteful aspects unaltered and rather manage a portion
of their indications in a shallow manner likewise hazard a political reaction by damaging
"political motivating force similarity requirements"- adequately pulverizing existing political
equilibria or alliances. We show later how this has been an endemic issue with policy change
in Africa, where as opposed to being focused at the principal political economy issues that
make poor policy, changes regularly centre around a result of these issues, such poor monetary
or fiscal policy.
Obviously, the overlooked details are the main problem. In what manner may current economic
policy decisions influence future political equilibria? How do political equilibria influence the
degree of welfare that will be accomplished later on? Unmistakably, these impacts may contrast
crosswise over settings, similar to democracies versus no democracies, yet we will contend that
in numerous cases they appear to be available and of first-request significance.
Empirical literature review
Bartels (2013) in a research noted that America’s political responded to the Great Recession
was surprising to specialists, but mostly consistent with patterns familiar to political scientists.
Ordinary citizens assessed politicians and policies primarily on the basis of visible evidence of
success or failure. In 2008, the president’s party was punished at the polls for the dismal state
of the election-year economy. The successful challenger, Barack Obama, pushed policy
significantly to the left, as Democratic presidents typically do, provoking a predictable
“thermostatic” shift to the right in the public’s policy mood. In 2010, slow economic recovery
and public qualms about ideological overreach exacerbated the losses normally suffered by a
president’s party in midterm elections. In 2012, Obama was re-elected as incumbents almost
always are when their party has held the White House for just four years, the study gave credit
to a modest but timely upturn in the gross domestic product GDP growth rate.
In a bid to answer how economic crises affect political representation in times of constrained
government, Traber et al (2017) carried out a study of the Western European Politics using
cross-national data. The study used 16 advanced industrialised countries and 48 elections for
the period covering 2001 and 2013. The dependent variable was issue salience congruence with
regard to economic issues. Thus, the study measured the direct links between the parties and
their voters, not between parties and the electorate as a whole. The key findings of the study
indicated that congruence has decreased considerably during the recent economic crisis. While
voters clearly prioritise economic issues in this situation, parties do not change their issue
priorities to the same extent. As a result, issue salience congruence between voters and parties
decreases. The study expects that in difficult macro-economic conditions, government parties
would be even less congruent with their voters than office-seeking opposition parties, because
they want to divert attention from their economic record, and because their hands are tied as to
what they can deliver in the future. However, the results also indicated that congruence levels
of government and office-seeking opposition parties are similar in times of crisis. These results
were found using Western European Politics whilst Zimbabwe is one of the African countries
which means the results cannot be directly inferred for Zimbabwe. The current study will be
done specifically be done for Zimbabwe.
Campos et al (2014) carried out a study on economic Growth and Political Integration,
estimating the benefits from Membership in the European Union using the synthetic
counterfactuals method. The objective of their paper was to provide a novel and more
satisfactory answer to the important question of whether one can identify significant and
substantial payoffs from “deep integration” (combining economic and political aspects and
using EU membership as a case study) in terms of higher per capita GDP and higher labour
productivity. The main finding were that there seems to be strong evidence on positive payoffs from EU membership, despite considerable heterogeneity across countries. More
specifically, focusing on the 1973, 1980s, 1995 and 2004 enlargements, the study find that per
capita GDP and labor productivity increase with EU membership in Denmark, Ireland, United
Kingdom, Portugal, Spain, Austria, Estonia, Hungary, Latvia, Slovenia and Lithuania. Some
countries benefited from joining European Union whilst others have not. Zimbabwean citizens
after the 2018 elections have been calling for political parties’ dialogue, therefore the study by
Campos et al (2014) works as a basis to give a framework of the prevailing conditions in
Zimbabwe. Hence, this current study digs into whether macroeconomic conditions have
relationship with political environment.
Latek (2018) noted that Zimbabwe needs much more than a newly elected president and
legislature. The country suffers from institutional dysfunction driven by years of a de facto
one-party, military-backed regime, characterised by rampant corruption and systematic
patronage, securing the capture of key economic areas and political institutions by party elites.
The current study makes use of econometrics modelling.
The empirical approach in this paper, in order to highlight the linkage between economic
growth and political environment is going to be modelled as shown in equation one. Secondary
data collected from reliable online sources is going to de used for the period spanning 19902018. Political environment will be monitored by the “good governance” defined by the three
dimensions, namely, corruption perception index, rule of law and political stability. Other two
independent variables to enter the model are foreign direct investment inflows and public
external debt.
gdpgrowtht  0  1corruptt  2 rlawt  3 polityt  4 fdi  5extt   t …………………………………(1)
Where; gdpgrowth is economic growth, corrupt is corruption perception index, rlaw rule of
law, polity is political stability, fdi is foreign direct investment, ext is public external debt,
subscript t is time component, ε is the error term.
Model diagnostics tests are going to be carried out before results interpretation and policy
Acemoglu, D. and Robinson, J.A., 2013. Economics versus politics: Pitfalls of policy
advice. Journal of Economic Perspectives, 27(2), pp.173-92.
Campos, N.F., Coricelli, F. and Moretti, L., 2014. Economic growth and political integration:
estimating the benefits from membership in the European Union using the synthetic
counterfactuals method.
Latek, M., 2018. Zimbabwe's post-electoral challenges. European Parliamentary Research
Lipsey, R.G. and Lancaster, K., 1956. The general theory of second best. The review of
economic studies, 24(1), pp.11-32.
Page, B.I., Bartels, L.M. and Seawright, J., 2013. Democracy and the policy preferences of
wealthy Americans. Perspectives on Politics, 11(1), pp.51-73.
Traber, D., Schwarz, D and Benoit, K., 2017. Estimating intra-party preferences: comparing
speeches to votes. Political Science Research and Methods, 5(2), pp.379-396.