China’s Political Stability as a Foundation for Stable Economic Growth: Key Lesson for Latin America

Abstract

This study examines how political stability shapes long-term eco­nomic growth by comparing China with seven major Latin American eco­nomies. China—unlike Latin American countries, where political volatility disrupts planning and limits the effectiveness of state policies—demonstrates a consistent and structurally embedded form of stability characterized not by highest absolute scores but by institutional continuity and the capacity to implement long-term policies. Using panel data models—including pooled, fixed effects, random effects, and mixed effects—the study employs regional dummy variables and interaction terms to capture the context-dependent effects of political stability on growth. The results show that political stability plays a decisive role in China’s sustained economic expansion, supporting investment, infrastructure development, and policy continuity, whereas in Latin America, frequent political shifts weaken state capacity and prevent stability alone from producing sustained growth. By highlighting these diver­gent dynamics, the article clarifies how China’s model provides practicable lessons for Latin America: the contribution of stability to growth depends on consistency, predictability, and institutional embeddedness rather than absolute levels alone. The findings offer targeted policy insights, emphasizing that Latin American countries must strengthen governance structures and long-term policy frameworks to achieve sustainable economic development.