Economic Security And Political Governance Crisis In Central African Republic:the Two Stage Instrumental Analysis

Nowadays the Central African Republic(CAR)is experiencing huge economic insecurity which mostly derives from the political governance crisis that the country has been continuously undergoing since its independence in 1960.This paper examines the relationship between political governance crisis and economic security in the country covering the period of 1996-2015,using two stage instrumental analysis and second order asymptotic tests.For our analysis,we have estimated 13 equations.Each equation has two regressions which take into account each proxy of political governance,while the proxy of institutional governance remained the same.Taking into the consideration,the different measurement of economic security which may determine within the country,the choice of our variables is carefully done based on the previous literature,the CAR's economic own characteristics,the cycle of political governance crisis consequences on the economy and the adequacy of data to be sought.Thus,interest has been put on 13 macroeconomics aggregates such as:net national income per capita,agricultural raw materials exports,agriculture value added,and external balance on goods and services,food exports,food imports,foreign direct investment,GDP growth,GDP per capita Growth,inflation,wage and salaried workers,industry value added,total natural resources rent and trade in CAR as proxies of economy security collected from World development indicators.For the case of crisis in terms of governance in CAR,in our analysis,we accord an importance to(Asongu and Nwachukwu,2017)discussion on political governance which is the election and replacement of political leaders(proxies with political stability/no violence and voice and accountability),institutional governance institutional governance' which is the respect by the State and citizens of institutions that govern interactions between them(measured with corruption-control and the rule of law.The data are collected from the Worldwide Governance Indicators.The results show a negative and significant impact of political stability and absence violence/terrorism,rule of law when net income is considered as proxy of economic security.Moreover,voice and accountability rule have a negative relationship with net national income.When agriculture and value added is considered as proxy of economic security,institutional governance appears to be statistically significant,while political stability and absence of violence/terrorism is not statistically significant but have a positive impact on agriculture value added.However,voice of accountability is not statistically significant but has a negative impact on agriculture value added.Similar case has been when external balance on goods and services is considered as proxy of economic security,political stability and absence of violence/terrorism are not statistically significant but have a positive relationship while voice and accountability is not statistically significant but have a negative impact.When food export is considered as proxy of economic security in both regressions,political stability and absence of violence/terrorism and voice and accountability have a positive and significant impact,while rule of law is not significant but has a positive impact.Similar also for Food imports,the impact of political stability and absence of violence/terrorism and voice and accountability are not statistically significant but have negative impact on foreign direct investment,while rule of law in both regressions affect positively the foreign direct investment.The influence of political stability and absence of violence/terrorism appears to be positive and statistically significant while voice and accountability is not significant but impacts positively when economy growth is considered as proxy of economic security.Moreover,rule of law is both regressions is not statistically significant but have positive impact on economic growth.The political stability and absence of violence/terrorism impacts positively and significantly GDP per capita growth while rule of law is not significant but has a negative impact in the regression 1,while in the regression 2,it impacts negatively and significantly GDP per capita growth.Rule of law in both regressions affect positively and significantly Wage and salaried workers while political stability and absence of violence/terrorism and voice and accountability are not statistically significant but have positive effects on Wage and salaried workers.The political stability and absence of violence/terrorism and rule of law in the regression 1 are statistically significant but have a positive impact on Industry,value added,while in the regression 2,voice and accountability have a positive impact and rule of law is statistically significant but have a negative impact on industry,value added.For the case of economic growth,in both regressions,rule of law is statistically significant but have negative impact on total natural resources rents.However,in the both regressions political stability and absence of violence/terrorism and voice and accountability are not statistically significant but have a positive impact on economic growth.Similar case has been observed with rule of law statistically significant but has negative impact in both regressions.We conclude that political stability and absence of violence/terrorism,voice and accountability,proxies of political governance crisis played a different role on national income per capita,agricultural raw materials exports,agriculture value added,and external balance on goods and services,food exports,food imports,foreign direct investment,GDP growth,GDP per capita Growth,inflation,wage and salaried workers,industry value added,total natural resources rent and trade,proxies of economic security.In view of the country's geopolitical situation,the negative impact of political governance crisis on economic security identified in this study,there is a need of appropriate policies at national and regional level which emphasize on political stability,good institution and the way in which the citizens of the Central African States,in particular CAR's citizens participated in the selection of government with emphasis on the freedom of expression,association and a free media.