Political Instability and Economic Development in Guinea-Bissau

Guinea-Bissau has experienced chronic political instability since the implementation of democracy in 1994 with a civil war several coups d'état assassinations and constant changes of presidents and governments. The country is among the poorest and most corrupt in the world and has one of the lowest HDIs in the world. This paper aims to analyze the impact of chronic political instability on Guinea-Bissau's economic development to understand whether it is the cause of the country's extreme poverty over the years. On the other hand it seeks to understand its relationship with widespread corruption and a low level of bank credit in the country and also to see what is the transmission channel from instability to economic growth in Guinea-Bissau.The methodology used is based on case studies combining data from the country with data from interviews with some of the country's personalities.The result shows that chronic political instability is the cause of low economic development and extreme poverty in Guinea-Bissau.