The ongoing political protests and marches organized by opposition political parties and interest groups against the government have started a new wave of demonstrations and rallies, with the government public demonstrations too launching a movement to regain public support.
Over the last few years, political protests and marches have become a regular feature of Pakistan’s political landscape. The right to protest is considered a sign of a healthy democracy so people can raise their voices to demand their rights. However, at the same time these protests are also associated with the closure of economic activities, violence and the loss of private and public goods.
It is critical to study the economic consequences of these protests, marches, and sit-downs. What are the economic costs of such protests? A strand of literature establishes a negative impact of political instability on growth (Matta et al, 2021). Shonchoy and Tsubota (2016) show that the manufacturing sector’s cost rises by about 1.17 percent due to the disruption caused by strikes in Bangladesh. Shrestha and Chaudhary (2014) documented that the average direct cost of general strikes was 1.4 percent of Nepal’s GDP. These strikes reduced GDP growth rates from 0.6 percentage points to 2.2 percentage points. Rahman (2014) shows that a ten-day strike led to, on average, a 3 percent loss to GDP per year in Bangladesh.
Matta et al (2021) show that actual GDP per capita is, on average, 4.3 percent lower than its counterfactual due to political instability and mass civil protests in the event year. The study further shows that Pakistan faces a significant loss of 2.7 percent in GDP per capita due to massive political instability with mass civil protest during the event year. Moreover, this study further indicates that actual GDP per capita did not fully recover its initial output loss.
Ahsan and Iqbal (2015) reveal that a political strike over seven days reduces a firm’s exports by 4.5 percent in Bangladesh….