How does stability of the government affect the business

In contrast, India is in the recent past fallen out of favor with businesses that prefer doing business elsewhere and taking their investments to countries that offer political stability. Further, the case of India also resembles China in so far as the competition for businesses to setup their operations is concerned.

Indeed, some states in India offer more stability than the others as well as continuity of policies. In other words, India and the states where the incoming government changes the policies are certainly not acceptable to the investors who take their projects elsewhere. The reasons for businesses favoring political stability is that once they get the permits and the licenses to operate in regions and states, they invest a lot of money in setting up facilities.

Further, even during the process of acquiring land and other assets, they need the cooperation of the government to facilitate the same. Apart from this, political instability hurts them as their employees are often forced to skip work because of strikes and other protests and this impacts the profits of the businesses negatively.

Moreover, businesses like a region that is friendly and welcoming towards them and not a hostile and unfriendly dispensation. The point here is that political instability hurts everything from profits to operations to the working conditions of the employees and hence, businesses avoid it. This may result in less 'business-friendly' policies, changes in business taxation and regulations or, perhaps, political changes that affect the firm's marketing.

Governments can also change the social agenda and this may impact on firms. For example, a government may introduce, or modify, a minimum wage. Many businesses oppose a minimum wage as they believe it:. Governments may also sign up to additional agreements. For example, the European Union governments agreed to improve the terms and conditions of employees in the Social Chapter of the Maastricht treaty , which sets out broad social policy objectives concerning working conditions, consultation of workers, employment rights, and social security.

This gave employees many additional rights including:. Changes of this nature will affect firms significantly and may increase their costs. There are few universally applicable approaches for achieving the conditions necessary for stable governance. This understanding should include input from the host nation population from various sides of the conflict and marginalized groups such as women, minorities, youth, and the poor.

Key considerations include the following:. For stability, prioritize governance functions that support the delivery of essential services and contribute to political settlements. Think hard about the protection of critical state resources— human, natural, financial, cultural, and infrastructure—that are necessary to prevent and mitigate conflict. Priorities should ultimately be determined by their potential to prevent conflict and increase the strength of nonviolent political settlements.

All choices in governance affect power relationships. The choice of an interim minister, the location of a municipal center, the adoption of a regulation, or the award of a contract to a local business has the ability to exacerbate tensions or address and resolve internal conflicts. Be sure to identify and understand the specific sources of conflict and motivations for violence to ensure that governance reform efforts do not reignite violent conflict.

The widely understood core functions of governance—security, the rule of law, meeting basic human needs, and economic governance—are intertwined like a rope. Failure to provide one will unravel the ability to provide the others. The administration and delivery of humanitarian assistance and basic services to the population, for example, depends on adequate security for civilians and some basic rule of law system that prevents banditry and looting of critical supplies and resources.

All of these core services depend on sound economic management and governance. We provide analysis, education, and resources to those working for peace around the world.