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In: Finance

Discuss the effects of government involvement in two other industries. Compare the differences and similarities of...

Discuss the effects of government involvement in two other industries. Compare the differences and similarities of these industries within the healthcare field.

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Expert Solution

I would like to discuss the effects of government involvement in information technology sector and banking.

Information technology

In this sector, The major revenue is derived from creation of software for business automation. Govt monitors the affairs of a business organisation and protects the interests of the stakeholders through regulations and statutes. Similarly, In this industry govt can impose various regulations on bench-marking standards on the generation of software and various other intangible products. Also,the other way in which the govt can appreciate information technology sector is by providing tax incentives. Pragmatically, Govts encourage export but discourage imports.

Banking Sector:

Banking is the backbone of a nation's economy, Here the govt closely monitors the various monetary activities executed by the bankers through it's central bank. Considering economic cycle, the govt tracks the liquidity in the economy. For instance,during high inflation govt would hike the interest rates to reduce the cash flowing in the economy and thereby reducing inflation.During low growth, govt slashes interest rates to increase liquidity in the economy and therefore leveraging growth.

Comparing Healthcare and Information Technology:

Healthcare industry comes under necessity goods, whereas IT is considered as an industry which makes lives easier through its innovation. The entire system on which these two industries operate is different. Healthcare industry is broadly tax free and subsidised whereas IT industry may get tax holidays depending on various other economic and business factors.

Comparing healthcare and banking sector:

Healthcare industry is often viewed as industry vastly operated by doctors but to the contrary there are other medics who are as equal in number as doctors. These professionals provide healthcare advisory services to their patients. Similarly,In investment banking sector the IB firms provide corporate advisory services to their corporate clients.


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