How Does Government Type Affect My Business?

How Does Government Type Affect My Business?

Dictatorship, democracy, monarchy, etc — it can make a big difference

By Carl Stanford

The way in which a government operates can have a huge affect on businesses.

Democracies and constitutional monarchies

A full democracy, or a constitutional monarchy like the UK, will generally tend to be more supportive of free trade and entrepreneurship.

It'll also tend to be more responsive to the changing needs and circumstances of business, and to operate transparent and fair laws and tax rules.

According to a Bloomberg report,, pro-democracy experts think that the system helps a country become wealthy. Some European countries, Japan and the U.S. are all relatively rich and are all democracies after all. However, there's another perspective that democracy is a luxury that only richer countries can literally afford.

Whatever your opinion, a democracy is typically pro-business, with supportive initiatives that help business start up and grow, and the government may also offer business funding.

Totalitarian dictatorships

A totalitarian monarchy or dictatorship, on the other hand, will be more likely to impose restrictive rules on businesses and to suppress the freedom of trade. They’re also more likely to suffer from corruption, unfair business practices and government control over certain business sectors.

Other countries may be less likely to seek trade agreements with authoritarian regimes.