Student Publications [Scholarly]

Does Stability Always Promote Development? Democracy, Governance, Knowledge-Based Exports, and Economic Performance in South Asia (1994–2024)

Document Type

Article

Abstract

This study examines the dynamic effects of political stability and democracy on economic development in South Asia from 1994 to 2024. Prior literature explored an uneven and mixed impact of governance and democracy on economic growth. This study fills a gap in the existing literature by incorporating the role of democracy and political stability in achieving sustained economic development. To examine the long and short-run impact of political stability and democracy, this study employed a panel ARDL/PMG model. Additionally, based on the cointegration tests and cross-sectional dependence, and for robustness, we used FMOLS and DOLS. The results indicate that democracy and technology exports, as proxy for the knowledge economy, have a strong positive impact on economic development, whereas political stability and trade freedom have a negative impact, likely due to rigid governance structures. Government consumption and human development also support development when efficiently managed. However, net investment and Government effectiveness appear to have no significant influence, highlighting the importance of quality over quantity. The base-model Panel ARDL/PMG results for the main variables are consistent with those from the robust models, i.e., FMOLS and DOLS. These results highlight key policy insights and directions, including the need for stronger democratic institutions, enhanced government effectiveness, targeted government spending, and reforms to promote political stability and foster economic growth. © The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature 2026.

Publication Title

Journal of the Knowledge Economy

Publication Date

2026

ISSN

1868-7865

DOI

10.1007/s13132-026-03472-y

Keywords

democracy, economic growth, high technology export, panel ARDL, political stability, South Asia

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