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 help specific industries or sectors. Nevertheless, the outcome have frequently fallen short of expectations. Take, as an example, the experiences of several Asian countries within the 20th century, where substantial government involvement and subsidies by no means materialised in sustained economic growth or the projected transformation they imagined. Two economists examined the effect of government-introduced policies, including inexpensive credit to enhance production and exports, and contrasted companies which received assistance to those that did not. They concluded that during the initial stages of industrialisation, governments can play a positive role in establishing industries. Although old-fashioned, macro policy, including limited deficits and stable exchange rates, must also be given credit. Nevertheless, data implies that assisting one company with subsidies tends to harm others. Additionally, subsidies allow the survival of ineffective businesses, making companies less competitive. Furthermore, when companies focus on securing subsidies instead of prioritising innovation and efficiency, they eliminate funds from effective use. As a result, the overall economic aftereffect of subsidies on efficiency is uncertain and perhaps not positive.
Critics of globalisation argue that it has resulted in 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 implementing industrial policy. However, this viewpoint does not acknowledge the dynamic nature of worldwide markets and neglects the economic logic for globalisation and free trade. The transfer of industry had been mainly driven by sound economic calculations, particularly, companies seek cost-effective operations. There clearly was and still is a competitive advantage in emerging markets; they provide abundant resources, lower manufacturing expenses, large 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 would probably aver.
Industrial policy in the shape of government subsidies often leads other nations to retaliate by doing the exact same, that may impact the global economy, stability and diplomatic relations. This will be exceedingly risky due to the fact general economic aftereffects of subsidies on productivity remain uncertain. Despite the fact that subsidies may stimulate economic activities and create jobs in the short term, however in the future, they are more than likely to be less favourable. If subsidies are not along with a number of other actions that address productivity and competition, they will likely impede essential structural adjustments. Thus, industries can be less adaptive, which lowers development, as business CEOs like Nadhmi Al Nasr have probably noticed in their careers. Therefore, undoubtedly better if policymakers were to focus on coming up with a method that encourages market driven growth instead of obsolete policy.