Economists assert that government intervention throughout the market should really be limited.
Industrial policy by means of government subsidies often leads other nations to retaliate by doing the same, which could affect the global economy, stability and diplomatic relations. This is certainly exceedingly dangerous as the overall financial aftereffects of subsidies on productivity remain uncertain. Despite the fact that subsidies may stimulate financial activity and create jobs in the short run, yet the future, they are likely to be less favourable. If subsidies are not accompanied by a wide range of other actions that target efficiency and competitiveness, they will likely hamper required structural corrections. Thus, industries will end up less adaptive, which reduces development, as business CEOs like Nadhmi Al Nasr have probably noticed throughout their careers. It is therefore, truly better if policymakers were to concentrate on coming up with a strategy that encourages market driven development instead of outdated policy.
History shows that industrial policies have only had minimal success. Various nations applied different types of industrial policies to encourage 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 twentieth century, where substantial government involvement and subsidies never materialised in sustained economic growth or the desired transformation they envisaged. Two economists examined the effect of government-introduced policies, including cheap credit to boost manufacturing and exports, and contrasted industries which received assistance to those who did not. They figured that throughout the initial phases of industrialisation, governments can play a positive role in establishing industries. Although old-fashioned, macro policy, such as limited deficits and stable exchange prices, also needs to be given credit. However, data shows that helping one firm with subsidies has a tendency to damage others. Also, subsidies permit the survival of ineffective companies, making companies less competitive. Moreover, when businesses concentrate on securing subsidies instead of prioritising creativity and efficiency, they eliminate funds from productive usage. As a result, the general financial effect of subsidies on efficiency is uncertain and possibly not good.
Critics of globalisation argue it has led to the relocation of industries to emerging markets, causing job losses and greater reliance on other countries. In response, they suggest that governments should relocate industries by implementing industrial policy. However, this viewpoint fails to recognise the dynamic nature of international markets and neglects the rationale for globalisation and free trade. The transfer of industry had been mainly driven by sound financial calculations, particularly, companies seek economical operations. There clearly was and still is a competitive advantage in emerging markets; they provide abundant resources, lower manufacturing costs, big consumer markets and favourable demographic patterns. Today, major companies operate across borders, making use of global supply chains and gaining the advantages of free trade as company CEOs like Naser Bustami and like Amin H. Nasser would likely aver.