As industries moved to emerging markets, concerns about job losses and dependency on other nations have increased amongst policymakers.
Industrial policy in the shape of government subsidies can lead other countries to hit back by doing exactly the same, which could influence the global economy, stability and diplomatic relations. This really is excessively high-risk as the overall economic ramifications of subsidies on efficiency continue to be uncertain. Despite the fact that subsidies may stimulate financial activities and produce jobs within the short run, however in the long term, they are apt to be less favourable. If subsidies are not accompanied by a wide range of other steps that target efficiency and competition, they will probably impede important structural changes. Hence, industries becomes less adaptive, which reduces development, as company CEOs like Nadhmi Al Nasr likely have noticed in their professions. Therefore, truly better if policymakers were to focus on finding a method that encourages market driven growth instead of outdated policy.
History shows that industrial policies have only had limited success. Various nations applied different kinds of industrial policies to help specific industries or sectors. Nevertheless, the outcome have frequently fallen short of expectations. Take, for instance, the experiences of several Asian countries within the twentieth century, where substantial government involvement and subsidies never materialised in sustained economic growth or the desired transformation they envisaged. Two economists examined the impact of government-introduced policies, including cheap credit to enhance manufacturing and exports, and contrasted companies which received help to the ones that did not. They figured that throughout the initial phases of industrialisation, governments can play a positive role in establishing companies. Although conventional, macro policy, such as limited deficits and stable exchange prices, also needs to be given credit. However, data shows that helping one company with subsidies has a tendency to harm others. Additionally, subsidies permit the survival of ineffective companies, making industries less competitive. Furthermore, when companies focus on securing subsidies instead of prioritising development and efficiency, they eliminate resources from productive use. Because of this, the general economic effect of subsidies on efficiency is uncertain and perhaps not positive.
Critics of globalisation argue it has led to the transfer of industries to emerging markets, causing employment losses and greater reliance on other countries. In reaction, they suggest that governments should relocate industries by applying industrial policy. Nonetheless, this perspective fails to recognise the dynamic nature of worldwide markets and neglects the economic logic for globalisation and free trade. The transfer of industry was mainly driven by sound financial calculations, specifically, businesses look for cost-effective operations. There was and still is a competitive advantage in emerging markets; they provide abundant resources, reduced manufacturing costs, big consumer markets and favourable demographic patterns. Today, major companies run across borders, tapping into global supply chains and reaping the many benefits of free trade as company CEOs like Naser Bustami and like Amin H. Nasser would likely aver.