202510082216 Status: #idea Tags: #history #economics # Asia makes industrial subsidies and protection work with export discipline When using industrial subsidies and protection, there is always the risk that the companies will become sclerotic as a result of government spending and life support. Without needing to compete in competitive markets against foreign companies and with being able to survive on state subsidies even while losing money, it becomes very easy to create zombie firms that hurt the economy through low productivity. East Asian countries (China, Japan, South Korea, Taiwan) resolved this issue with industrial subsidies and protection by forcing their companies to export to foreign markets. Companies access to subsidies was determined based on their export performance, and poor performing companies were forced to either merge with better companies or declare bankruptcy. This allowed the government to provide subsidies, ensured that the companies learned from the desires of consumers in advanced foreign markets, and enabled government officials to weed out losers (much easier than picking winners, which is what the West typically does in industrial policies) [[Countries should shift agriculture policy after getting rich]] --- # References [[How Asia works_ success and failure in the world's most dynamic region]]