Sun Sep 15 09:30:01 UTC 2024: ## Industrial Strategy: A Dangerous Trend Towards Government Intervention
**A new wave of “industrial strategy” is sweeping the globe, with governments using subsidies, regulations, and protectionism to promote domestic industries and create jobs. While proponents tout it as a modern version of the successful US moon mission, critics argue that it undermines competition, distorts markets, and ultimately harms innovation.**
**The allure of industrial strategy stems from its promise of national economic security and control over key sectors. However, this approach carries significant risks.**
**First, it prioritizes national interests over global needs, leading to a dangerous spiral of protectionism and subsidies.** This is exemplified by the global race for chip manufacturing, where countries are pouring billions into domestic production, creating a dependency on state support and leading to potential market distortions and inefficiencies.
**Second, industrial strategy undermines competition and stifles innovation.** By favoring selected companies through subsidies and regulations, it discourages healthy competition and reduces the incentive for businesses to pursue efficiency and technological advancement. This can lead to a decline in overall productivity and innovation, ultimately harming the global economy.
**Third, it opens the door to corruption and cronyism.** Governments intervening in the private sector, especially with large sums of money at stake, creates fertile ground for corruption and the favoring of politically connected companies.
**The author argues that mid-size economies should avoid succumbing to this trend and instead focus on investing in education and fostering a competitive environment.**
**The article highlights the dangers of the current “industrial strategy” craze and calls for a global dialogue on its potential risks and benefits.** It warns that uncritical acceptance of this approach could lead to a world characterized by inefficient economies, distorted markets, and a decline in innovation, hindering the progress of vital sectors like green technology.
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