Around the world, countries are undergoing transitions to democracy. Although democratic development varies, democratization always changes relations between business and government. In Mexico, for example, liberalization of elections expanded the opposition's representation in parliament, ending domination of the executive over legislation and policy. Now small businesses have new opportunities to make their voices heard.
In every country, there are differences in interests and goals within the business community. Small firms have different interests from large multinationals in areas such as labor relations, tax policy and health care. The degree to which business interests are fragmented based on policy issues, cronyism or other factors often indicates the degree of distortion in the underlying market economy.
One split divides firms dependent upon import protection from those engaged in international trade. In many countries, protectionism nurtures "hot-house industries" that cannot compete in world markets. The influence that bureaucrats enjoy here fosters corruption. The result is a form of state socialism whose major beneficiary is a well-connected business elite that excludes genuine entrepreneurs and their employees.
Major differences also divide firms that remain publicly owned from those privatized, as well as from those always private. Public sector firms have incentives to lobby for subsidies, protection and cheap credit. They use their work forces to stall reform. Conversely, private firms tend to support a more open and competitive economy and society.