Economists contend that government intervention throughout the market should be limited.
Industrial policy in the shape of government subsidies often leads other countries to retaliate by doing the same, that may impact the global economy, stability and diplomatic relations. This is certainly excessively high-risk due to the fact general financial effects of subsidies on productivity remain uncertain. Even though subsidies may stimulate economic activity and create jobs in the short run, however in the long run, they are prone to be less favourable. If subsidies are not accompanied by a number of other measures that address productivity and competitiveness, they will likely hamper necessary structural adjustments. Hence, companies can be less adaptive, which reduces development, as company CEOs like Nadhmi Al Nasr likely have noticed in their careers. Hence, definitely better if policymakers were to concentrate on coming up with an approach that encourages market driven development instead of obsolete policy.
History indicates that industrial policies have only had limited success. Many countries applied different kinds of industrial policies to encourage particular industries or sectors. However, the outcomes have usually fallen short of expectations. Take, as an example, the experiences of a few Asian countries in the 20th century, where considerable government input and subsidies never materialised in sustained economic growth or the intended transformation they envisaged. Two economists evaluated the effect of government-introduced policies, including inexpensive credit to improve production and exports, and contrasted companies which received help to those that did not. They figured that through the initial stages of industrialisation, governments can play a positive part in developing industries. Although old-fashioned, macro policy, such as limited deficits and stable exchange prices, should also be given credit. Nevertheless, data implies that assisting one firm with subsidies has a tendency to damage others. Additionally, subsidies enable the endurance of inefficient firms, making companies less competitive. Moreover, when businesses concentrate on securing subsidies instead of prioritising innovation and effectiveness, they remove resources from effective use. Because of this, the entire economic aftereffect of subsidies on productivity is uncertain and possibly not good.
Critics of globalisation contend it has resulted in the transfer of industries to emerging markets, causing employment losses and increased reliance on other nations. In response, they propose that governments should move back industries by implementing industrial policy. But, this perspective fails to recognise the dynamic nature of worldwide markets and neglects the basis for globalisation and free trade. The transfer of industry had been primarily driven by sound economic calculations, specifically, businesses look for cost-effective operations. There clearly was and still is a competitive advantage in emerging markets; they offer numerous resources, lower manufacturing costs, big consumer areas and favourable demographic trends. Today, major businesses 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 likely aver.