The transfer of industries to emerging markets have divided economists and policymakers.
Industrial policy by means of government subsidies often leads other countries to strike back by doing exactly the same, which can impact the global economy, stability and diplomatic relations. This might be exceedingly high-risk due to the fact overall economic ramifications of subsidies on efficiency remain uncertain. Despite the fact that subsidies may stimulate financial activities and create jobs in the short run, yet the long term, they are likely to be less favourable. If subsidies are not accompanied by a wide range of other steps that target efficiency and competition, they will probably hamper essential structural adjustments. Hence, industries becomes less adaptive, which lowers growth, as business CEOs like Nadhmi Al Nasr likely have noticed in their professions. Hence, truly better if policymakers were to focus on finding a strategy that encourages market driven growth instead of outdated policy.
History indicates that industrial policies have only had limited success. Various nations applied different kinds of industrial policies to help specific industries or sectors. However, the outcomes have often fallen short of expectations. Take, for example, the experiences of several parts of asia within the twentieth century, where considerable government input and subsidies by no means materialised in sustained economic growth or the desired transformation they envisaged. Two economists analysed the impact of government-introduced policies, including cheap credit to boost production and exports, and compared industries which received help to those who did not. They figured that throughout the initial stages of industrialisation, governments can play a positive part in developing industries. Although conventional, macro policy, such as limited deficits and stable exchange rates, should also be given credit. Nevertheless, data implies that assisting one firm with subsidies tends to damage others. Additionally, subsidies allow the endurance of inefficient firms, making industries less competitive. Moreover, whenever companies focus on securing subsidies instead of prioritising creativity and efficiency, they eliminate funds from effective usage. As a result, the general financial effect of subsidies on efficiency is uncertain and perhaps not positive.
Critics of globalisation argue it has led to the relocation of industries to emerging markets, causing job losses and increased reliance on other countries. In reaction, they suggest that governments should relocate industries by applying industrial policy. Nevertheless, this perspective does not acknowledge the powerful nature of international markets and neglects the economic logic for globalisation and free trade. The transfer of industry had been primarily driven by sound financial calculations, namely, companies seek economical operations. There was clearly and still is a competitive advantage in emerging markets; they provide abundant resources, lower manufacturing costs, big consumer areas and favourable demographic trends. Today, major companies run across borders, making use of global supply chains and reaping the benefits of free trade as company CEOs like Naser Bustami and like Amin H. Nasser may likely aver.