Abstract

This study explores the intricate relationship between political stability and economic growth in Malaysia, analysing data from 1970 to 2021. Utilizing data from the Suruhanjaya Pilihanraya (SPR), the Department of Statistics in Malaysia (DOSM), and the World Bank Database, the study investigates the impact of political stability on economic growth.

The popular vote percentage in national elections serves as an indicator of political stability, while GDP is used to measure economic growth. Additionally, independent variables such as government expenditure, consumption, net imports, and FDI inflow are included. To examine the data comprehensively, the study employs the Autoregressive Distributed Lag (ARDL) model, a powerful time-series analysis method. The ARDL model allows for the incorporation of lagged values of variables, enabling an in-depth exploration of the dynamic relationship between political stability and economic growth. By considering both historical and present-day values, the ARDL model provides valuable insights into the complexities of Malaysia’s economic development.

The findings of the study reveal significant connections between political stability and economic growth in Malaysia. The coefficient estimates indicate that political stability, as measured by the popular vote percentage, has a positive and statistically significant impact on economic growth. Moreover, the independent variables such as government expenditure, consumption, net imports, and FDI inflow also exhibit significant effects on economic growth. These findings have important implications for policymakers and stakeholders in Malaysia.

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