State influences over organisations

Government economic policy affects organisations in the following ways:

• Overall economic policy: market demand, cost of finance, taxation;

• Industry policy: protection versus free trade, grants, incentives, sponsorship, regulation, entry barriers, capacity;

• Environment and infrastructure policy: distribution;

• Social policy: workplace regulation, employment law, labour supply, skills, education;

• Foreign policy: trade promotion, export credits, WTO regulations, Export promotion to allies, aid recipients.

Decisions by firms about expanding their capacity can be influenced by government policy:

• Cash grants or tax incentives;

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