Balancing economic security, economic growth, and sustainable stability as pillars of G20 states

Introduction This study investigates the dynamic relationship between reserve-based external liquidity buffers, economic growth, and sustainable stability in G20 countries over the period 2002–2025. In an era characterized by recurrent global shocks—including financial crises, pandemics, and geopolitical tensions—the study aims to evaluate how macroeconomic buffer capacity and growth performance relate to political stability. Economic security, while conceptually multidimensional, is operationalized in this study as reserve adequacy, proxied by foreign exchange reserves relative to GDP. Methods The empirical analysis is based on annual panel data for 19 sovereign G20 countries. To address dynamic persistence, potential endogeneity, reverse causality, and unobserved country-specific heterogeneity, a two-step System Generalized Method of Moments (System GMM) estimator is employed. The validity of the empirical strategy is supported by a comprehensive set of econometric tests, including Pesaran cross-sectional dependence tests, Pesaran CIPS unit root tests, and standard System GMM diagnostic tests. Results The findings reveal strong persistence in political stability across G20 countries. Reserve adequacy is found to have a positive and statistically significant effect on sustainable stability. Economic growth also exhibits a positive association, while government effectiveness emerges as a key contributing factor. In contrast, trade openness does not have a statistically significant direct effect when controlling for other variables. Robustness checks using alternative instrument lag structures indicate that the results are sensitive to instrument specification. Discussion Overall, the results suggest that external liquidity buffers, sustained economic growth, and effective governance play a crucial role in enhancing political stability in G20 countries under conditions of global uncertainty. The findings highlight the importance of maintaining adequate reserve levels and strengthening institutional quality as part of a broader strategy for achieving sustainable stability.