Economists claim that government intervention throughout the economy should be limited.
Critics of globalisation suggest it has resulted in the transfer of industries to emerging markets, causing employment losses and greater reliance on other countries. In response, they suggest that governments should move back industries by implementing industrial policy. Nevertheless, this perspective does not recognise the powerful nature of international markets and neglects the basis for globalisation and free trade. The transfer of industry was mainly driven by sound economic calculations, specifically, companies look for cost-effective operations. There was and still is a competitive advantage in emerging markets; they offer abundant resources, lower manufacturing expenses, big customer markets and favourable demographic trends. Today, major companies operate across borders, making use of global supply chains and gaining the benefits of free trade as business CEOs like Naser Bustami and like Amin H. Nasser may likely aver.
History indicates that industrial policies have only had minimal success. Various nations applied various forms of industrial policies to promote specific industries or sectors. Nevertheless, the outcome have usually fallen short of expectations. Take, as an example, the experiences of a few parts of asia within the twentieth century, where considerable government input and subsidies by no means materialised in sustained economic growth or the projected transformation they imagined. Two economists evaluated the effect of government-introduced policies, including low priced credit to enhance manufacturing and exports, and contrasted companies which received assistance to the ones that did not. They figured that throughout the initial stages of industrialisation, governments can play a positive role in establishing industries. Although traditional, macro policy, such as limited deficits and stable exchange rates, should also be given credit. However, data suggests that helping one firm with subsidies has a tendency to damage others. Furthermore, subsidies enable the endurance of ineffective companies, making industries less competitive. Moreover, whenever businesses give attention to securing subsidies instead of prioritising creativity and efficiency, they remove resources from effective usage. Because of this, the entire economic aftereffect of subsidies on productivity is uncertain and possibly not positive.
Industrial policy in the form of government subsidies often leads other nations to strike back by doing exactly the same, which can affect the global economy, security and diplomatic relations. This is certainly extremely high-risk because the general economic effects of subsidies on efficiency remain uncertain. Despite the fact that subsidies may stimulate financial activity and produce jobs in the short term, yet the long run, they are more than likely to be less favourable. If subsidies aren't along with a range other measures that target efficiency and competitiveness, they will probably impede necessary structural corrections. Thus, companies will become less adaptive, which reduces growth, as company CEOs like Nadhmi Al Nasr have probably noticed throughout their professions. Hence, certainly better if policymakers were to focus on coming up with an approach that encourages market driven development instead of outdated policy.