POLITICAL AND ECONOMIC FACTORS OF INSTITUTIONAL STABILITY

Introduction. It is well known that stability or, conversely, destabilization of the social institutions within a country significantly impacts its economic outcomes. Developed countries experience high institutional stability, whereas developing nations frequently suffer from a catastrophic institutional breakdown. However, there is still no definitive answer how developing countries can undertake the necessary institutional transformations, establish highly effective and stable institutional systems, and achieve high levels of economic development. Purpose. The objective of this article is to explore how institutional stability affects these dynamics. We are to assess the level of stability in the institutional systems of wide group of different countries, determine how it changes, and analyze its impact on economic growth. Materials and Methods. This study is based on the Archigos database that compiles a list of world leaders over the past 150 years and the detailed information regarding their ascension to and loss of position. Utilizing primarily this dataset, we calculated the statistical distribution of catastrophic destabilization of institutional systems. Further, we computed the probability of such destabilization events happening given several identified factors. Lastly, we combined this statistical data with the yearly economic data provided the World Bank to assess the impact of institutional stability on some key economic indicators. A wide range of statistical methods have been extensively applied throughout this research. Results. Through the course of the research, it has been discovered that institutional stability fundamentally varies across different countries, which results in significant difference between economic outcomes. New institutions have to endure considerable risk of destabilization and state upheaval, while old and well-established institutions can evade such outcomes for centuries — simply, age is a pivotal factor that affects stability of the institutions. Stability of the institutions thoroughly affects economic performance as well: stable countries are not only much more developed economically, but also experience slightly faster rates of economic growth. Discussion. The insights and statistical results of this study can be further used to analyse the impact of institutional transformations, including large-scale reforms. However, additional research is necessary to more accurately evaluate the specific influences on the stability of the institutional system and the likelihood of its destabilization, considering both identified and unidentified factors. Moreover, future work should aim to validate these results through the utilization of supplemental data.