Widespread corruption, lack of transparency, and poor governance are among the reasons why political instability occurs. If leaders or governments are perceived as corrupt and ineffective, it will cause public outrage and protests, thus calling for leaders to step down.
Many studies have shown that political instability can serve as a stumbling block to economic development. When a country is embroiled in political instability, it encounters innumerable challenges that can hinder economic progress and detrimentally impact society.
Government changes often result in discontinuing or abandoning projects initiated during the previous administration at the district, state, or national levels. These projects were expected to offer numerous benefits, such as economic growth, increased job opportunities, and poverty alleviation. However, these efforts eventually do not bear fruit.
The discontinuation of development projects can also lead to a significant waste of resources. Billions of ringgits invested in these projects are squandered when they remain abandoned. This not only places financial burdens on the government but also hampers the economy from growing at a favorable pace.
Furthermore, political instability has great repercussions for foreign and even domestic investments. Investors are hesitant to invest in a country plagued by political instability, thus hampering economic development and limiting the inflow of capital. Consequently, many job opportunities that could have been created through investments are lost. Additionally, reduced foreign investment may lead to the depreciation and weakness of the Malaysian ringgit due to a decline in the demand for Malaysian ringgit.
In addition, holding elections to elect a new government requires substantial spending, which can have deleterious impacts. Before elections, large-scale campaigns will be waged to deliver manifestos to the public, which usually entail various costs, including advertising and campaign staff salaries.
Therefore, the importance of political stability cannot be overstated when considering economic development. This is because the people will bear the brunt of the consequences of political instability, and the country’s goal of becoming a developed nation may remain unfulfilled.
Dr Mohd Shahidan Shaari is a senior lecturer from the Faculty of Business and Communication, Universiti Malaysia Perlis.
