The Role of Good Corporate Governance in Economic Stability

Abstract

Poor corporate and governmental governance leads to serious consequences, both legally and economically. Corruption, abuse of power, and weak accountability undermine public and investor trust, thereby reducing national economic stability. In the Indonesian context, the practice of Good Corporate Governance (GCG) is viewed as an essential instrument to prevent crises and strengthen legal legitimacy. Nevertheless, the implementation of GCG is often hindered by agency problems, weak law enforcement, and entrenched corrupt practices. This study employs a normative juridical method by analyzing regulations, business practices, and corruption cases within both the public and private sectors. The findings indicate that GCG plays a preventive role against corruption and institutional dysfunction, while also serving as a vital mechanism for ensuring justice, transparency, and business sustainability. Therefore, strengthening regulatory frameworks, enhancing law enforcement, and maintaining policy consistency are key strategies for establishing effective governance in Indonesia, ensuring that GCG contributes to long-term economic resilience and institutional integrity.