As industries relocated to emerging markets, worries about job losses and reliance on other nations have grown amongst policymakers.
History has shown that industrial policies have only had limited success. Various countries implemented different forms of industrial policies to encourage certain industries or sectors. Nevertheless, the results have often fallen short of expectations. Take, for instance, the experiences of a few Asian countries in the twentieth century, where considerable government intervention and subsidies by no means materialised in sustained economic growth or the projected transformation they envisaged. Two economists analysed the effect of government-introduced policies, including low priced credit to boost production and exports, and contrasted companies which received help to the ones that did not. They figured that through the initial stages of industrialisation, governments can play a positive role in developing companies. Although antique, macro policy, including limited deficits and stable exchange prices, additionally needs to be given credit. Nevertheless, data shows that assisting one company with subsidies has a tendency to harm others. Additionally, subsidies permit the endurance of ineffective businesses, making industries less competitive. Moreover, when companies give attention to securing subsidies instead of prioritising innovation and efficiency, they remove resources from effective usage. Because of this, the overall financial aftereffect of subsidies on efficiency is uncertain and perhaps not good.
Industrial policy in the form of government subsidies can lead other countries to hit back by doing exactly the same, that may influence the global economy, security and diplomatic relations. This is extremely risky as the overall economic ramifications of subsidies on productivity remain uncertain. Despite the fact that subsidies may stimulate financial activities and produce jobs within the short term, yet the long term, they are more than likely to be less favourable. If subsidies aren't along with a range other actions that target efficiency and competitiveness, they will likely hamper necessary structural corrections. Thus, companies becomes less adaptive, which lowers growth, as business CEOs like Nadhmi Al Nasr likely have noticed in their professions. It is, undoubtedly better if policymakers were to concentrate on coming up with an approach that encourages market driven growth instead of obsolete policy.
Critics of globalisation say it has resulted in the transfer of industries to emerging markets, causing job losses and increased reliance on other nations. In reaction, they suggest that governments should relocate industries by implementing industrial policy. Nevertheless, this perspective does not recognise the powerful nature of international markets and neglects the rationale for globalisation and free trade. The transfer of industry was primarily driven by sound financial calculations, specifically, businesses seek economical operations. There clearly was and still is a competitive advantage in emerging markets; they offer abundant resources, reduced manufacturing expenses, large consumer areas and favourable demographic patterns. Today, major companies run across borders, making use of global supply chains and gaining the many benefits of free trade as company CEOs like Naser Bustami and like Amin H. Nasser may likely aver.