How not to do industrial policy

China 's race to dominate new 'clean' technologies such as solar panels has motivated retaliation in both the US and EU, further worsening relations among the economic superpowers. Photograph: Michael Conroy/AP

Economists recognise three valid arguments for such interventions. The first concerns “externalities” or uncompensated benefits provided by a firm. The most obvious come from what workers and other firms learn from it. There also exist national security and other social externalities. The second argument concerns co-ordination and agglomeration failures: thus, a number of firms may be viable if they start together, but none may be viable if it starts on its own.

Yet failure is not the only risk. So is success. Industrial policies run the risk of provoking international retaliation. South Korea used protection of domestic markets as an indirect way of subsidising exports, thereby creating successful new industries. But it was a small country, under US protection. For larger countries, international repercussions must be taken into account. This is something China has learned recently, with its race to dominate new “clean” technologies.

The answer is that there are now at least three bipartisan positions: nostalgia for manufacturing; hostility to China; and indifference to the international rules that the US itself created. This, then, is a new world, one in which the international trading order could reach a breaking point quite quickly.

Donald-Trump Us Joe-Biden

Ireland Latest News, Ireland Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

If the electorate demands better disability services, politicians will be forced to respondAn attitude of benign support is not enough for people with disabilities and their families
Source: IrishTimes - 🏆 3. / 98 Read more »

Politicians, officials in breach of lobbying rules to be fined up to €25,000New measures to allow for the imposition of sanctions, including a ban on lobbying for two years, to come into effect from this weekend
Source: IrishTimes - 🏆 3. / 98 Read more »

Rishi Sunak the latest example of the issues when politicians co-opt pop hitsHugh Linehan: Countless politicians have tried to co-opt pop hits as campaign anthems
Source: IrishTimes - 🏆 3. / 98 Read more »

Government prepared to introduce new laws to protect politicians from abuseMinister McEntee said the move is under consideration after a spate of reported incidents against public representatives including hoax bomb calls to her home
Source: IrishMirror - 🏆 4. / 98 Read more »

In pictures: The count begins in Ireland's elections as politicians await fateThe counting process in Ireland's local elections is well under way a day after voters headed to the polls
Source: IrishMirror - 🏆 4. / 98 Read more »

RTÉ chair to tell politicians future funding should be ‘sufficient, predictable and independent’Chairman Terence O’Rourke to appear before the Media Committee on Wednesday
Source: IrishTimes - 🏆 3. / 98 Read more »