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Government: Definition, Influence on Business

Updated on April 15, 2022 · By Ahmad Nasrudin

Government
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Government is a system that regulates a country or a system that we use to control a state. It also refers to a group of people who run a country and make decisions at the national or regional level. The government makes laws, regulations, collects taxes, and prints money.

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The government runs the country for the benefit of the population. They are trying to make society more prosperous through several targets such as:

  • Sustainable economic growth
  • Low inflation and unemployment rates
  • Supportive competition and investment climate
  • Environmentally-friendly business practices
  • Equal access to education and health
  • Reducing economic inequality and poverty

Government influence on business

The government encourages companies to create more jobs and implement good corporate governance. The government usually provides some incentives. Also, the government is interested in corporate taxes, a key source of state revenue.

Government affects business in many ways, including:

  • Regulations and laws such as antitrust regulations, consumer protection, environmental safety, and work safety
  • Economic policies include subsidies, minimum wages, taxes, government spending, exchange rates, and interest rates
  • International policies, such as trade agreements, import policies, and the establishment of trade blocs.

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