What Is The Role Of The Political Economy In A Country?


Even in nations recognized as politically solid and political shifts can affect businesses. These impacts may arise because of the legal framework change by the government or the government changing its political view of businesses. These changes would lead to fewer business-welcoming policies, political shifts that impact a company’s marketing or changes in company regulations/taxations.

Moreover, governments can impact businesses by changing the social agenda. For instance, governments can modify/introduce the minimum. Most companies oppose this minimum wage because they assume it damages flexibility, increases costs and minimizes international competitiveness.

So, what’s the role of political economy in a country? This enlightening post will take you through politics and political instability, cover the importance of political economy and let you know how political economy can help a country.

What Is Politics And Political Instability?

Politics refers to the science and exercise of influencing individuals via the practice of power, such as political parties, governments and elections. On the other hand, political instability refers to the tendency of a government to break down either as a result of conflicts or uncontrolled competition between different political parties.

As technology changed the business world,politics has its own way too. Political instability can affect businesses significantly or make companies unwilling to venture into new markets or run businesses in new capital. Moreover, it can steer activity relocation to a more foreseeable and substantial place since business operators hate risk cases. Political instability in areas where companies run businesses will indicate that organizations must remain adaptable/flexible. They must be prepared for operation change within a short-lived notification to reflect the political environment changes.

How Do Politics And Political Instability Affect A Country’s Economy?

Political stability and a country’s economic growth are intensely interlinked. The uncertainty connected with an unsteady political surrounding may cut the economic development pace and reduce investment. Also, poor financial performance levels may cause political unrest and government collapse. However, a country can attain political stability via oppression or by recommending political parties that don’t have to clash to be re-appointed.

The above cases display political stability as a dual-edged blade. While political stability can offer a desideratum, peaceful environment, this surrounding can quickly become a nurturing place for favoritism with impunity. This issue is the puzzle most nations with a weak political command have to encounter.

Why Is Political Economy?

Political economy refers to the study of a country’s citizens and market governance. It remarkably impacts local and global markets because the economics and politics fields affect and control each other. These two fields are correspondingly taken as identically exceptional because they both impact governance.

Is Political Economy Important?

Political economy & ‘political’ science go hand-in-hand, which is more applicable than ever. Besides going hand-in-hand, the political environment, the social construct and economic systems are intimately intertwined. Therefore, a comprehensive understanding of the three elements is necessary to attain productively and needed outcomes. Political economy accurately combines these study elements and enhances the assessment of different socio-economic theories, like liberalism, capitalism, and more.

Can A Political Economy Help A Country?

Political economy can help a country develop greater transparency about the elements enhancing and impeding excellent development results. It can help a country concentrate on innovative offerings that strengthen current and potential progress steers. Besides this, political economy can help a nation calibrate the best area to utilize economic strengths-technical mastery, financing and convening power. It makes it easy for a country to find out how to work diligently towards reinforcing demand and supply for top-notch government and governance.

Outlook And Conclusion

Generally, political economy aims to identify the link between people and governments and the public policy’s impact on society. Some of its themes/characteristics include government interaction and public policy impact on society, who benefits from services/goods production, property/other resource owners, demand & supply, wealth distribution and services/goods production.


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