Day: June 24, 2018

How Politics Can Affect A Country’s Economy

You might be wondering how you can this can happen? It has been researched and seen its right that a country’s politics can affect its Economy. A country’s political stability directly interconnects with its economic growth. For a nation to grow economically, it must have an atmosphere of political easiness.
When we talk of politics, we are talking about power exercise. When we look at a country’s history, some economic powers are very crucial and run its activities. For example, the issue of taxation power and issuance of currency is in the realm of each country.


When you visit or study the current state in many countries, you will find that they control economic exchange between private sectors. This affects much on how a country will develop as the private sector inputs a lot of resources in its work.

So those enforced policies by the government commonly known as political factors affect economic growth, hence changing the living standard of its occupants. So, can we look into how these political factors play a vital role in the economic development?

1. The system of government
Ina country, the system that governs it plays a critical role. The government system can be authoritative, communist, and democratic among others. A government might influence business policies in a country that affects economic developments both personal and public.

2. Stability and instability of government structures
The government structures in a country are maybe durable and reliable. This will depend on the security of that country where there are no risks of conflicts either internal external. In a nation that possesses the high threat of terrorists makes it have instability, and this affects its business operations. Wars in a country harm the currency exchange rate when you compare it to other states globally. No, any investor will be willing to put his or her hard earned money in a place where there is no stability. So those country’s with less stable structures they experience slow growth in their economy.

3. Trade laws
This can be either national or international. The policies of a country are made by the political class, and these policies may affect a country’s strength in its import and exports. There can be trade tariffs passed by the politicians regarding trade and trade tariffs are reduced. The undeveloped or developed countries can see taxes that limit them from participating in the international trade fair. For example, Donald jr email on car tariffs where he stated: “companies doing businesses in the U.S. will receive huge tariffs if E.U. increases their massive tariffs and barrier

4. Corruption
This is a killer disease in most countries and has made several states to lag behind in their economic growth. Here we are talking on the dishonest levels and the illegal practices that happen across all businesses and amongst people in a particular country. The political class can use their power badly where they can be negatively influenced by companies where they receive bribes from wealthier firms who do not want any competition from new firms. The politicians will vote against those firms as they have accepted a bribe, hence a state of monopoly will develop and no economic development observed. This comes with services and commodities that are very expensive.

5. Management of government policies
It’s the work of government to monitor and enforce all policies made in a country. Businesses cannot operate well in states that do not incorporate copyright and piracy laws that create a firm not to maximize on their profits.

6. Political egocentrism
Some individuals may be left free even after committing serious crimes like treachery among others. It can rule out potential investors as they fear government misconduct activities by the political class. For example, Donald jr emails have two problems where they state the information was from a government source and was confidential which was not. He was found on wrong but his father the U.S. president advocated for him.