How can the government's power to coerce (influence economic behavior) be economically beneficial?

The issue of government regulation has been the cause of much debate over the years. Be that as it may, government presence in the business sector is significant. Government presence is highly required for emerging economies. Governments in these economies put in place many economic policies that are designed to enhance growth. For these policies to work, government presence is required.

Government presence in business can be helpful or detrimental. The problem with government involvement is when it over regulates the business sector. Over-regulation causes the economy to stagnate. The relationship between governments and businesses has always been bittersweet. Some business people feel that government presence causes a decrease in the profitability of businesses. Government regulation helps to protect consumers from frivolous business people.

Studies have shown that government presence is significant for economic growth. The government gets involved by providing financial and legal advice to firms. It also creates a conducive environment for businesses to thrive. This is achieved by ensuring: low crime rates, low levels of corruption, and creating incentives for firms. As technology advances, governments are forced to enter into regulatory and collaborative relationships with organizations. To spur growth, governments are advised to maintain a neutral role.