Business lobbies have close ties with politicians who support their interests.
Politics and business are interrelated, as one of the most important success factors for a government is its economic policy. Economic growth and the development of a stable, competitive environment for businesses is a top priority for local and national administrations. However, political decisions, such as trade bans or state monopoly on certain fields of the economy, can have serious effects on the world of business.
State Monopoly
In the former socialist states, all enterprises belonged to the state and monopolized their respective field. However, even in free-market economies, certain sectors of the economy have remained a state monopoly for political reasons, such as the universal right of citizens to afford basic services. For example, in the United Kingdom, the state has the monopoly on public services, including health care with the National Health Service (NHS). Similarly, in Greece, electricity is provided only by the state corporation "Public Power Corporation" ("Ε---). Such decisions affect businesses, which are not allowed to compete with state corporations and make profit from these markets.
Barriers to International Trade
Embargoes imposed for political reasons can have a serious impact on international trade, as they prevent businesses from seeking profit at certain markets. A prominent example of a politically motivated trade ban is the U.S. embargo against Cuba, until its government shows "greater respect for human rights," as the Cuban Democracy Act of 1992 suggests. Furthermore, according to the Latin America Working Group Education Fund, political candidates have chosen to support the trade ban to attract votes from the pro-embargo Cuban-Americans of Florida.
International Aggreements
International agreements have the opposite effects of embargoes. In an international agreement, two or more governments reach an agreement on political and financial cooperation, allowing businesses to start from "pole position" in search of profit in the new markets. In addition, governments can promote foreign investments to the country as a means of luring new businesses to fuel economic growth. Governments of the Republic of Ireland have been using this method since the late 1990s, resulting in $87 billion worth of U.S. investment stock in 2008.
Fiscal Policy
Fiscal policy refers to public spending, taxation or borrowing to stimulate economic activity, employment and demand. Contrary to monetary policy, the control of the money supply for this purpose, fiscal policy is not set by a country's central bank, but from the government. For this reason, politics play a major role in economic policy, as governments have to think twice before abandoning promises to businesses --- for example raising corporate tax because of increased spending.
