Economic and political activities are the two most important aspects as far as the affairs of a nation are concerned. Question is, how much interdependence these two have on the other, especially the economic activities on the political ones? Asking so because there are many instances when the economic decisions taken by the incumbent prove to be its doing or undoing in the bid for reelection. The success alleged by the incumbent or the failure as pointed out by the opposition on the economic front play major role in such a scenario.
refer to
POLITICAL ARITHMETICK: PRO
BLEMS WITH GDP AS AN
INDICATOR OF ECONOMIC PROGRESS
The political system established in a country will define the economic conditions under which its economy will develop. For this reason, all political events will have, in one way or another, a certain influence in the economy of the country.
I think that economics and politics move somehow separately, although there might be substantial interaction in some cases. Consider the USA. Presidents change every 4 years, but there were no radical changes in economic growth levels, or other macro parameters. At the same time, Arab Spring brought destruction to economies of many countries. China has the same ruling party over several decades, and follows a steady growth path. But some other countries with long lasting dictatorship may have bad economic situation. So we have multiplicity of cases: a) constant politics over time does not necessarily generate economic success, b) political changes destroy the economy not always.
Unstable or government without good majority find difficult to take important decisions and in democracy the role and cooperation of opposition parties is equally important. One should have proper vision and it's better if government with good majority and strong leadership rules the country. In case of coalation government very very important decisions are or may be delayed leading to or affecting the overall growth of nation. Sometimes politics become bigger than important issues.
Sometimes investment also get affected by political atmosphere full of instability and government changes or falls due to lack of support or majority.
Whether politics influence economic condition of a nation reminds me to the traditional chicken or egg problem. Politics is about power and economics is about wealth. So what can you do with power in a bankrupt economy? Nothing, except autarchic politics, whereas the appliance of power towards the right politics helps to create a wealthy economy, which again helps to sustain and or increase power. So in a free world, politics become to be the art of the possible, which is such a skill that, according to the measure (power/politics) of the possible, knows what its wants (economy) and wants, what it can do (politics).
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Political events have influence on almost all the economic activities , such as investment, tax, debt , savings, credit etc. of a nation.
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