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  • Klaus Ilmonen

The Peace Dividend: Economic Growth and Political Stability

From May 27, 2016

With the unfolding of recent world events there is ever-increasing evidence of the strong links between economic growth, political stability and the development of corporate structures.

Economic development and political stability go hand in hand. Economic growth provides the basis for favourable political development, and better political institutions support economic growth. In Western countries the development of corporate governance has been found to have strong links to the political structures of society. These structures are reflected in corporate ownership patterns and in corporate governance models.

In other regions of the world the links between economics and politics are more extreme. The security situation in Afghanistan is deteriorating due both to Western withdrawal and declining economic growth. The World Bank reported declining GDP growth for 2014 at 2 percent and some 2.5 percent for 2015 – with severe effects on fiscal stability and the ability to maintain security. The main adversary in Afghanistan is poverty and lack of future prospects which drives political instability and results in violence.

For insightful commentary, see Mark Roe and Jordan Siegel on the effects of political instability as well as the World Bank report from 2015 on Afghanistan.

The train to Heiratan in Afghanistan

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