CHANGES to a cabinet are an essential indicator of political instability. It is the number of times in a year in which a new leader is named and/or when 50% or more of cabinet posts are occupied by new ministers.

It has been found to be associated with lower economic growth. Greater political instability leads to greater uncertainty concerning future economic policies, and, consequently, to weaker economic growth.

Studies have since provided clear empirical support for the hypothesis that political instability adversely affects economic growth, with cabinet changes always statistically significant (“How Does Political Instability Affect Economic Growth?”, Ari Aisen and Francisco Jose Veiga, IMF Working Paper 2011).

The working paper said: “Political instability is likely to shorten policymakers’ horizons, leading to suboptimal short-term macroeconomic policies. It may also lead to a more frequent switch of policies, creating volatility, and thus, negatively affecting macroeconomic performance.”

In their empirical study to determine the effects of political instability on economic growth, they said: “Our results are strikingly conclusive: in line with results previously documented, political instability reduces GDP growth rates significantly. An additional cabinet change reduces the annual real GDP per capita growth rate by 2.39 percentage points. This reduction is mainly due to the negative effects of political instability on total factor productivity growth, which account for more than half of the effects on GDP growth.”

The message is clear: political instability is harmful to economic growth. 

It is not surprising that Johor’s Sultan Ibrahim Sultan Iskandar should voice his concern over rumours concerning the stability of the government, although six months have passed since the general election.

“Enough is enough. How long must the 30-over million people of our country endure this situation?” he said in a Facebook post.

Remember the three rights of a ruler – the right to be consulted, the right to encourage, and the right to warn.

The country must take heed when a ruler exercises the last right. – May 10, 2023. 

* Hafiz Hassan reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.