The Impact of Political Policies on Global Economic Stability: A Literature Review

Abstract

This study aims to analyze the relationship between political policies and global economic stability through a literature review approach focusing on studies published over the past five years. The findings highlight that political stability plays a crucial role in maintaining macroeconomic balance, enhancing investment flows, strengthening public trust in economic institutions, and fostering inclusive growth. Conversely, political instability generates fiscal uncertainty, reduces investor confidence, slows down economic growth, and hampers sustainable development efforts. The study further reveals that transparent fiscal governance, robust public institutions, and credible political communication are the main determinants of economic resilience. In addition, the adaptation of political and fiscal policies to global transformations such as digitalization and the green energy transition has become a strategic necessity for sustaining long-term development. This research concludes that adaptive, coherent, and inclusive political policies are essential to creating durable economic stability and resilience amid the growing complexity of modern global challenges.