Unmasking the Economic Traps: How Corruption, Political Instability, and Public Debt Stall Growth in South Asia – A Panel Study

Abstract

This paper aims to investigate effects of corruption, political stability, trade, inflation rate, and government public debt on economic growth in major South Asian nations during 2001-2022.The present study has used Generalized Method of Moments (GMM) for analyzing panel data. The results therefore show that corruption and public debt both negatively affect economic growth as concluded in previous analysis that portray corruption as having positive impacts on the efficiency of governance and institutions. Government stability also show a strong negative relationship with growth keeping aside from the fact that stability is very essential when it comes to political stability. On the other hand, import and export have positive impact that lead to growth through enhancing trade openness and the markets. This macro economical aspect pulls down growth and is probably driven by inflation. It awards more importance to institutions, governance and political stability key ingredients that are necessary for a sustainable economic development in South Asia region. That is why, these results show that for the development of sustainable growth, institutional changes designed to enhance the quality of institutions and combat corruption are required.