Historical attempts at applying industrial policies demonstrated mixed results.
Economists have analysed the impact of government policies, such as providing inexpensive credit to stimulate manufacturing and exports and discovered that even though governments can perform a productive part in establishing industries during the initial stages of industrialisation, conventional macro policies like limited deficits and stable exchange rates tend to be more crucial. Furthermore, present information shows that subsidies to one company can harm others and may also cause the survival of inefficient companies, reducing overall industry competitiveness. Whenever firms prioritise securing subsidies over innovation and effectiveness, resources are diverted from productive use, potentially hindering productivity development. Additionally, government subsidies can trigger retaliation of other nations, influencing the global economy. Albeit subsidies can stimulate financial activity and produce jobs for a while, they are able to have negative long-lasting impacts if not followed by measures to deal with efficiency and competitiveness. Without these measures, industries may become less adaptable, fundamentally impeding development, as business leaders like Nadhmi Al Nasr and business leaders like Amin Nasser might have seen in their careers.
In the previous several years, the discussion surrounding globalisation has been resurrected. Critics of globalisation are contending that moving industries to asian countries and emerging markets has resulted in job losses and heightened dependence on other countries. This viewpoint shows that governments should intervene through industrial policies to bring back industries to their respective nations. Nonetheless, many see this viewpoint as failing continually to comprehend the powerful nature of global markets and disregarding the underlying factors behind globalisation and free trade. The transfer of companies to other countries are at the center of the issue, which was mainly driven by economic imperatives. Businesses constantly seek economical functions, and this motivated many to relocate to emerging markets. These areas provide a number of benefits, including numerous resources, lower manufacturing expenses, large customer markets, and favourable demographic pattrens. As a result, major companies have actually expanded their operations internationally, leveraging free trade agreements and making use of global supply chains. Free trade enabled them to get into new market areas, diversify their income streams, and benefit from economies of scale as business leaders like Naser Bustami would probably attest.
While experts of globalisation may lament the loss of jobs and heightened reliance on international markets, it is vital to acknowledge the broader context. Industrial relocation is not entirely a result of government policies or business greed but rather a reaction to the ever-changing characteristics of the global economy. As industries evolve and adjust, so must our comprehension of globalisation as well as its implications. History has demonstrated limited results with industrial policies. Many nations have tried various kinds of industrial policies to improve certain industries or sectors, but the results usually fell short. For instance, within the 20th century, a few Asian countries applied extensive government interventions and subsidies. However, they could not attain sustained economic growth or the desired transformations.