A recent analysis by the Ifo Institute has found that former entrepreneurs pursuing a market-oriented economic policy can be associated with higher economic growth. According to the study, published on Wednesday, business leaders as politicians can be an attractive option for societies that support a market-oriented economic policy.
The analysis suggests that entrepreneurs in political offices tend to advocate for reducing state social spending, a move that can potentially lead to social tensions. However, this could also result in a more balanced budget, increased public investments and investment incentives for the private sector, according to Niklas Potrafke, the head of the Ifo Center for Public Finance.
While the idea of having more business leaders in politics may seem appealing for economies struggling with low growth, there is a crucial condition, Potrafke emphasized. A market-oriented economy with competition and strong institutions that prevent corruption is essential to ensure the positive impact of business politicians. “It must be ensured that business politicians do not abuse their office for the interests of their own companies” he said.