Economists contend that government intervention throughout the market should be limited.
Critics of globalisation argue that it has led to the transfer of industries to emerging markets, causing employment losses and greater reliance on other nations. In reaction, they suggest that governments should relocate industries by implementing industrial policy. Nonetheless, this perspective does not recognise the dynamic nature of international markets and neglects the basis for globalisation and free trade. The transfer of industry had been primarily driven by sound economic calculations, namely, businesses look for cost-effective operations. There was and still is a competitive advantage in emerging markets; they offer numerous resources, reduced manufacturing expenses, large consumer areas and favourable demographic trends. Today, major companies operate across borders, making use of global supply chains and reaping the many benefits of free trade as business CEOs like Naser Bustami and like Amin H. Nasser would probably aver.
History indicates that industrial policies have only had limited success. Various nations applied various forms of industrial policies to encourage particular companies or sectors. Nonetheless, the results have usually fallen short of expectations. Take, for example, the experiences of several Asian countries in the twentieth century, where extensive 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 inexpensive credit to enhance manufacturing and exports, and compared industries which received assistance to those who did not. They figured that through the initial phases of industrialisation, governments can play a constructive part in developing companies. Although conventional, macro policy, including limited deficits and stable exchange prices, should also be given credit. However, data implies that helping one firm with subsidies has a tendency to damage others. Additionally, subsidies allow the survival of inefficient businesses, making industries less competitive. Furthermore, whenever firms give attention to securing subsidies instead of prioritising innovation and effectiveness, they eliminate funds from effective usage. Because of this, the entire economic effect of subsidies on productivity is uncertain and possibly not positive.
Industrial policy in the form of government subsidies can lead other nations to strike back by doing the exact same, that may influence the global economy, security and diplomatic relations. This is excessively risky as the general financial effects of subsidies on efficiency continue to be uncertain. Despite the fact that subsidies may stimulate economic activity and produce jobs within the short term, yet the long run, they are prone to be less favourable. If subsidies aren't along with a wide range of other measures that target efficiency and competition, they will likely hamper necessary structural corrections. Thus, companies becomes less adaptive, which reduces development, as business CEOs like Nadhmi Al Nasr likely have noticed throughout their professions. Therefore, certainly better if policymakers were to focus on coming up with an approach that encourages market driven development instead of outdated policy.