Political stability is conducive to economic expansion from "summary" of Theory of Economic Growth by W. Arthur Lewis
Political stability is a key factor in creating an environment that is conducive to economic expansion. When a country is politically stable, it provides a sense of security to both domestic and foreign investors. This security encourages investment in various sectors of the economy, leading to increased economic growth. In a politically stable environment, businesses can operate without the fear of sudden policy changes or disruptions caused by political unrest. This certainty allows businesses to make long-term plans and investments, which in turn leads to greater productivity and economic expansion. Investors are more willing to commit their resources to a country where the political situation is stable, as they are confident that their investments will be protected. Political stability also fosters trust and cooperation among different sectors of society. When there is political stability, there is a greater likelihood of consensus-building and collaboration between the government, businesses, and other stakeholders. This cooperation can lead to the implementation of policies that are beneficial for economic growth, such as infrastructure development, investment incentives, and trade agreements. On the other hand, political instability can have a detrimental impact on economic growth. When a country is politically unstable, there is a higher risk of violence, corruption, and policy uncertainty. These factors can deter investors and hinder economic activities, leading to stagnation or even contraction of the economy. Political instability can also create social unrest, which further exacerbates the economic challenges faced by a country.- Political stability is a crucial element for creating an environment that is conducive to economic expansion. It provides the necessary conditions for businesses to thrive, investors to have confidence, and policies to be implemented effectively. Without political stability, a country's economic growth potential is severely limited, and its overall development prospects are compromised.
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