The political environment can bring impact to an organization in many ways. It could be add a risk factor to an industry and lead to a major less. For an example, the business sector will grows because of political stable as the foreign investors and some trading
However, in the long run these will have an effect on unemployment that will rise up and getting even worse. Moreover, most people are unlikely to be happy to accept higher taxes as it reduces disposable income and the level of consumption. A reduction of government spending may result in less people will support the government. Demand side policies will bring down the price level (reduce inflation), but they will result in lower national output and rise in unemployment. Therefore, government could use supply side policies to deal with the unemployment situation such as in interventionist supply-side policies will increase the levels of human capital of an economy by support education and training institutions with subsidies or tax benefits and for market-based supply-side policies will reduce trade union power.
Not only that, competition is also reduced due to the elites having so much wealth and power, the smaller firms will be weeded out by the larger firms and monopolies or oligopolies will form, this will cause barriers of entries and increase in prices of products. Financial and government institutions are very important to sustained economic growth, as it can be seen from the above passages, if abused; these institutions can cause large inefficiencies in the market and economy. However, if these institutions are done correctly and power and wealth can
The second argument is that income inequality could cause sociopolitical instability which can result in lower investment rate and therefore lower growth. Even though it normally takes some time for inequality to cause a political instability, its impact on investment and growth tend to be instantaneous. The third argument is that in the case of imperfect capital markets, income inequality could more likely lead to a decrease in investment in human resources which causes a shrink in the economic
Corruption has been found to be a major obstacle to economic growth (growth of small and medium term enterprise) in developing countries. According to Murphy and Vishny, (1991), Corruption negatively affect the allocation of entrepreneurial talent, when, in highly corrupt environments, entrepreneurs may spend a lot of their time and efforts to obtaining valuable licenses and preferential market access than to improving productivity and this can hinder
As a result from the benefits of rapid economic growth to fall in hands of the elite, cherished these privileged treatments causing political structure that looks deprive and dominated by elite’s authoritarianism. Promoting capitalism and nurtured capitalist class and middle class. Meanwhile, limited the political rights. Economic growth reduces poverty, it 's true but inequalities remain high. So, even though the growth that gives benefits the majority but capitalist class and the alliance are the ones grab
As a result, it is very important to arrange enough money in order to set up own procedure. Negative impact on exchange rate Negative impact on exchange rate of developing nation as FDI can at times influence trade rates for the advantage of one nation over another. Negative effect on interest in the nation, the standards representing trade rates and direct venture could negatively affect investing nation. The speculation might be precluded in some remote markets, which implies that it is difficult to complete alluring prospects (Keller, 2010). Exploitation of
However, the effects of social protection expenditures of governments on long-run economic growth are not clear with two opposite evidence. On the one hand, the benefit these programs provide can discourage people from working. Because of the decline in the amount of labor supplied in the economy, the level of output and, in some circumstances, the level of capital investment and hence growth can lower. On the other hand, social protection expenditures will make a positive contribution to the economic growth since the individuals are insured against disease and unemployment risk and therefore they become more productive and motivated to work. These two different suggestions keep the debate open about whether social protection is an expenditure or an investment.
The results of depopulation have a direct impact on the economy of the country that has borrowed too much for repayment by the young generation. Still, the growth in population is increasingly becoming unmanageable because of global warming, which is predicted to have undesirable economic concerns. Economically decrease in population can result in deflation and it will cause harsh effects on countries like Japan, Germany, and China. A common phenomenon with depopulation in various countries is population aging which can result in economic loss in the country. This paper will discuss depopulation in
Both positive and negative effects are involved in the channels of transmission. Trade liberalization has had a poverty-reducing effect through enhanced growth, productivity and investment and through price stability. But it also has entailed some costs, in particular costs related to fiscal adjustment, which have been poverty-increasing. The axe of lower tax revenues resulting from lower import taxes and control of the fiscal deficit fell on developing expenditures. Not only are such expenditures directly pro-poor, but the employment opportunities that could have been created as a consequence of these expenditures were also foregone, adversely affecting the income of the poor.