European University of Lefke (EUL), Faculty of Economics and Administrative Sciences, Assoc. Prof. Dr. Derviş Kırıkkaleli’s study, which was prepared together with Prof. Dr. Vedat Yorucu, titled Nexus between Economic Stability and Political Stability in China and Japan, in which the relationship between Economic Stability and Political Stability in China and Japan is discussed, was published in the journal ‘The Economic Research Guardian’. In the research, two separate causality approaches were used to explore the direction of causality between economic stability and political stability for the two Asian economies.
Kırıkkaleli gave information about the study and said; The Asia-Pacific region has become the center of attention of the world due to its dynamic economic growth over the last decade. This rapid economic growth triggered uncertainties and led to a potential crisis that eventually led to significant political unrest in the region. Sino-Japanese bilateral relations have caused some complex problems in the host countries, which are met with significant internal changes. These changes had a relatively more dramatic effect on China than on Japan. Considering its volume of growth, investment and level of foreign aid in terms of global trade, China has expanded its role in the region and has become a game-changing factor in international trade. In terms of Nominal GDP (Gross Domestic Product), the economies of China and Japan are the first and second largest economies in Asia, respectively. China and Japan’s overall level of economic risk was low between 1998 and 2018, while Japan’s political stability outperformed China’s.
It is clear that an unstable economic environment is often considered harmful to economic growth. Moreover, such instability is likely to be triggered by political issues. Unexpected regime change and political turmoil are expected to slow economic growth. Achieving high economic prosperity, improvement in economic performance and encouraging a nation’s entrepreneurs are only possible if the country achieves political stability. Permanent and long-term investment decisions are based on predicting political stability. It is widely accepted that such instability will adversely damage economic growth if such political stability is not achieved.
EUL Lecturer Assoc. Prof. Dr. Derviş Kırıkkaleli and Prof. Dr. Vedat Yorucu’s study has shown that there is an important relationship between economic and political stability in China and Japan. Therefore, in order to minimize the fragility in the political environment in both countries, the government must have ensured economic stability. It also needs to control political fluctuations in order to minimize economic risk.