How the governments can help develop businesses in order to improve the economic factor and revenue of the overall economy for a country?

Thanks for your broad based thought provoking question. The Government can certainly help to improve overall economy of a country through different policies as follows: 

Fiscal Policy:  The government shall invest more in infrastructure development (Roads, Electric Power Generation, Water Supply and Sanitation), Education Facilities and Health Services. These investments shall spur the growth of private sectors business which will create employment. People will then buy goods and services, which will again provide business opportunity for private sector.  Another factor is to keep the taxes reasonable. High taxes will discourage the private business investment, trade and commerce. 

Policy on Foreign Direct Investment (FDI): The cost of capital in developed economy is low (low interest rate). So, foreign multinational companies (MNCs) have financial incentive to invest in lower developed countries (LDC) or developing countries provided there is infrastructure i.e. Road, Power and Water Supply. FDI also creates employment for local people, which ultimately increases the income and spending capability of local people.

Good Governance: The Govt. shall prioritize good governance system so that private sector business as well as foreign Multinational Companies will come with FDI

Monetary Policies:   Central Bank of country under the leadership of govt. plays an important role to increase Business investment. The central bank (banker of the commercial banks) can regulate the interest rate. At low interest rate, Private Sector will borrow fund to invest in profitable business. At higher interest rate, the investment will be low or nil.

Govt. shall not be in Business: The Govt. shall not do any profit making or revenue generating business itself (which are often loss making enterprise) rather shall facilitate private business investment through proactive policies like infrastructure development, lower interest rate and Good Governance.

Investment in Tourism: Finally, the Govt. shall actively facilitate private sector /MNCs for investment in tourism industry which has become a growth engine in many economies as it has so many backward and forward linkages of the economy

Efficient Bureaucracy:  The bureaucracy shall be honest, efficient and not in Rent-Seeking business. Rent seeking business of Bureaucracy decease FDI as well local private business investment.

 Examples: Look at Dubai- it was fishing village in "year", and now it is a thriving business center of Middle -East- Why?  A big part of the answer is above. 

Similarly, look at Malaysia. In "year", it was an agricultural county with per capita GNP (Gross National Product) of around “-USD0-”. With proactive policies of the Govt., Malaysia is now a developed economy with per capita GNP of “$0” and still moving ahead.

Key recommendations for government policy in the fostering of entrepreneurial ecosystems are:

1. Make the formation of entrepreneurial activity a government priority – The formulation of effective policy for entrepreneurial ecosystems requires the active involvement of Government Ministers working with senior public servants who act as ‘institutional entrepreneurs’ to shape and empower policies and programs.
2. Ensure that government policy is broadly focused – Policy should be developed that is holistic and encompasses all components of the ecosystem rather than seeking to ‘cherry pick’ areas of special interest.
3. Allow for natural growth not top-down solutions – Build from existing industries that have formed naturally within the region or country rather than seeking to generate new industries from green field sites.
4. Ensure all industry sectors are considered not just high-tech – Encourage growth across all industry sectors including low, mid and high-tech firms.
5. Provide leadership but delegate responsibility and ownership – Adopt a ‘top-down’ and ‘bottom-up’ approach devolving responsibility to local and regional authorities.
6. Develop policy that addresses the needs of both the business and its management team – Recognise that small business policy is ‘transactional’ while entrepreneurship policy is ‘relational’ in nature.

Thank you Mr. Rami for invitation , Agree with Mr.Vinod and Mr. Fazlur answers.

Thanks for the invite. Government plays a key role by designing and implementing policies that can boost business performances as discussed by the experts here. Programs and other business activities like organizing a business exchange summits help in acheiving some economic exposures.

I agree with Mr. Fazlur Rahman answer and have voted for him.

Different Governments ( Under developed, developing and developed countries)  are taking different policies on this regard . Developed countries government could be able implement more advanced policies as they have everything simple available on hand, but again under developed countries can’t go to that extent as they are facing  shortage for many things.

In general, following strategies could be implemented for better developments.

1-      Reduce government interference and avoid monopolistic markets.

2-      Provide more subsidy on various business and its row materials.

3-      Invite international investment through government by showing enough security for global investors.

4-      Government provide free result oriented training to the Business people inside the Country and workers in line to explore themselves in the upcoming future for a better development.

5-      Keep frequent monitoring on the result from all activities of this program, to take sudden action for better improvements.

6-      Effective implement SWOT analysis by expert officers on timely manner.

7-      Provide free and effective educations to the Country people, monitor, do assessment and work on the results.

 

I think by careful implementation of these strategies, by time to time  the overall GDP of any country could be developed well. 

Governments can:

1. Figure out a process to catalyse Entrepreneurship and implement it
2. Find people and invest in projects that have the potential to deliver
3. Give funding to people/projects that impact society at large

 

In addition to the answers, I would like to add the following factors that help in developing businesses and economy:

1. Low interest rates

2. Low taxes and fees on new projects

3. Supporting and helping new investors

4.  Facilitating import and export

 

Thank You