Political environment includes political conditions such as general stability and peace in the country and specific attitudes that elected government representatives hold towards business. The significance of political conditions in business success lies in the predictability of business activities under stable political conditions. On the other hand, there may be an uncertainty of business activities due to political unrest and threats to law and order. Political stability, thus, builds up confidence among business people to invest in the long term projects for the growth of the economy. Political instability can shake that confidence. Similarly, the attitudes of government officials towards business may have either positive or negative impact upon business.

What is the potential effect of political instability on the confidence of business people, according to the passage?

Shake confidence

Political stability builds up confidence among business people to invest in long-term projects for the growth of the economy. Political instability can shake that confidence. If the confidence is shaken then any company does not enter into the projects which are for the long term. It ultimately affects the growth of the economy.