Public Policy Effectiveness and Economic Development: The Role of Institutions and Political Stability

Abstract

This study examined the relationship between public policy effectiveness, institutional quality, political stability, and economic development across 40 emerging and developing economies using panel data from 2000 to 2023. A quantitative research design was applied, and secondary data were collected from the World Bank and other global governance databases. The sample consisted of 40 countries with 920 observations. Econometric regression analysis was used to estimate the relationships among variables and to evaluate their individual and combined effects on economic development. The results showed that public policy effectiveness significantly influenced economic development (β = 0.44, t = 6.92, p = 0.000). Institutional quality also demonstrated a strong positive effect (β = 0.39, t = 5.88, p = 0.000), while political stability showed a significant but comparatively lower impact (β = 0.31, t = 4.76, p = 0.000). Institutional quality (β = 0.36, t = 5.42, p = 0.000) and political stability (β = 0.28, t = 4.39, p = 0.000) significantly enhanced public policy effectiveness. The findings confirmed that strong institutions and stable political environments strengthened policy effectiveness and contributed to sustainable economic growth. Institutional quality emerged as the most influential factor among the variables, followed by public policy effectiveness and political stability. The study concluded that improving governance structures remained essential for achieving long-term economic development in emerging economies.