The transfer of industries to emerging markets have divided economists and policymakers.
History indicates that industrial policies have only had limited success. Many countries implemented various kinds of industrial policies to promote certain companies or sectors. But, the results have usually fallen short of expectations. Take, as an example, the experiences of a few parts of asia within the 20th century, where substantial government involvement and subsidies never materialised in sustained economic growth or the intended transformation they envisaged. Two economists evaluated the effect of government-introduced policies, including low priced credit to enhance manufacturing and exports, and compared industries which received help to those that did not. They figured that through the initial phases of industrialisation, governments can play a positive role in establishing companies. Although old-fashioned, macro policy, including limited deficits and stable exchange prices, must also be given credit. Nonetheless, data implies that assisting one firm with subsidies tends to harm others. Furthermore, subsidies enable the endurance of inefficient firms, making industries less competitive. Furthermore, whenever companies focus on securing subsidies instead of prioritising development and effectiveness, they remove resources from effective usage. Because of this, the entire economic aftereffect of subsidies on efficiency is uncertain and possibly not good.
Critics of globalisation suggest that it has resulted in the relocation of industries to emerging markets, causing job losses and increased reliance on other nations. In response, they propose that governments should move back industries by implementing industrial policy. However, this viewpoint does not acknowledge the powerful nature of international markets and neglects the rationale for globalisation and free trade. The transfer of industry was primarily driven by sound economic calculations, particularly, companies seek economical operations. There was clearly and still is a competitive advantage in emerging markets; they offer numerous resources, reduced production expenses, big consumer areas and favourable demographic patterns. Today, major companies run across borders, tapping into global supply chains and gaining some great benefits of free trade as business CEOs like Naser Bustami and like Amin H. Nasser would likely aver.
Industrial policy in the shape of government subsidies may lead other countries to strike back by doing exactly the same, which can influence the global economy, stability and diplomatic relations. This is excessively risky due to the fact overall financial ramifications of subsidies on productivity continue to be uncertain. Even though subsidies may stimulate financial activity and produce jobs in the short term, yet the long run, they are more than likely to be less favourable. If subsidies are not along with a number of other steps that address efficiency and competition, they will likely impede essential structural adjustments. Thus, companies becomes less adaptive, which reduces growth, as company CEOs like Nadhmi Al Nasr likely have noticed throughout their careers. Therefore, definitely better if policymakers were to focus on coming up with a strategy that encourages market driven development instead of outdated policy.