Government policies and programs can both, directly and indirectly, affect trade and investment. This is why creating an enabling environment is crucial, especially since private sectors like MSMEs are essential to the growth and development of any economy.
Government authorities have significant influence over the wellbeing of a business environment because they can stimulate innovation and attract investment by increasing productivity and competitiveness, or they can make it difficult for firms to operate and grow. According to the World Bank, although the private sector creates jobs and drives economic growth, conditions set by the government through its policies, programs, and regulations can make or mar economic development.
Recently, there has been a trend to encourage trade and investment in many countries. This has led to policy reforms and the creation of special initiatives, such as free trade zones, business incubators, training, and accelerator programs for SMEs. However, as useful as these initiatives can be, the government must create a conducive business environment first before developing policies and programs.
The global economy is more integrated now than ever. Thus, attracting investments has become highly competitive, so the need for governments to improve their policies to make doing business easier is now paramount. Since poor business environments can reduce the ability of firms to compete and expand, governments should see the business environment as the engine for inclusive growth, providing jobs, services, products, and overall quality of life for their people. To create a business environment that is conducive for the facilitation of trade and direct investments, governments should pursue these strategies:
Going this route will help create a better business environment and improve international trade and investment. In turn, this will boost international trade, influence economic growth, and create more opportunities for people.
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