Why State–Business Relations Matter for Sustainable Development

The ways in which states and businesses engage and influence one another profoundly shapes the progress of nations towards the Sustainable Development Goals (SDGs). Governments shape business activities through policies and regulation. Businesses affect government objectives and strategies, for instance through investment decisions, lobbying, or partnership proposals. In a globalised world, state–business relations operate at multiple levels from transnational to local, involving actors ranging from microenterprises to global institutions. What matters for development is: how do these relations work in practice, and how can they be made effective for multifaceted goals such as zero hunger or decent work? Political economy analysis tells us that the preferences and strategies of state and business actors are not fixed, but evolve over time, often through processes of negotiation. Recognising this fluidity, and highlighting how powerful interests play out, are essential to identifying where collaboration can deliver mutual benefit, highlighting risks such as collusion, ensuring that no important actors are excluded, and that the distribution of benefits is fair.