To understand the interaction between government policy measures and industries affected by them, three kinds of information must be available. They are:
The economic role of government
Knowing what governments are aiming at in trying to influence the way the different parts of the economy work gives us a general idea of the kinds of economic transactions which governments have with industry and which form the subject of negotiation between industry and government.
The place of government in the structure of the economy
The form and intensity of negotiation depend on how important government is to industry. If government is ‘large’ in relation to the economy, there is a presumption that industrial firms will have to invest heavily in negotiating skills, particularly where such firms are highly dependent on government contracts.
The trends in the size of government relative to the economy
Although the relationship between government and the rest of the economy may change only gradually, change does occur and this requires industrial firms to keep their strategy under review. Also with international companies operating in different countries, it is helpful to know how both structure and growth in government differ between countries.
