Why is political stability important for economic development?

Political stability is crucial for economic development because it fosters an environment that is conducive to investment and builds confidence among businesses and consumers. When a nation is politically stable, it typically experiences lower risks associated with unpredictable changes in government or policy. This stability encourages both domestic and foreign investors to commit capital, knowing that their investments are less likely to be threatened by abrupt changes in law or social unrest.

In a politically stable environment, businesses are more likely to plan for the long term, which leads to increased economic activities and job creation. This investment and growth cycle can strengthen the economy and promote sustainable development. Additionally, political stability helps to maintain social order and can lead to effective governance, which is fundamental for implementing development policies, infrastructure investments, and enhancing overall living standards.

The other options do not directly capture the essence of the relationship between political stability and economic development as effectively. While they may touch on relevant points, the fundamental drivers for economic growth lie significantly within the investment climate fostered by political stability.