The Rise of 'Homeland Economics' Brings Resilience But Also Risks

Governments are turning to "homeland economics" to reduce risks from markets, shocks like pandemics, and geopolitical opponents. This combines national security and economic policy.
Strategies include raising tariffs, subsidies for sectors like chips and electric vehicles, and export bans. Rich countries now have most industrial policies.
Spending is huge, like America's Inflation Reduction Act subsidies for green energy. Firms are "reshoring" production due to political winds.
Supporters say homeland economics brings resilience, fairness and environmental gains. But it will reduce growth and efficiency. The costs are diffuse, unlike benefits.
In 10 years the West may be as reliant on China and as unequal. What then - more flawed industrial policy? Trouble is being stored up.

economist.com

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Posted 10/2/2023, 8:41:52 AM

The Rise of 'Homeland Economics' Brings Resilience But Also Risks

Governments are turning to "homeland economics" to reduce risks from markets, shocks like pandemics, and geopolitical opponents. This combines national security and economic policy.
Strategies include raising tariffs, subsidies for sectors like chips and electric vehicles, and export bans. Rich countries now have most industrial policies.
Spending is huge, like America's Inflation Reduction Act subsidies for green energy. Firms are "reshoring" production due to political winds.
Supporters say homeland economics brings resilience, fairness and environmental gains. But it will reduce growth and efficiency. The costs are diffuse, unlike benefits.
In 10 years the West may be as reliant on China and as unequal. What then - more flawed industrial policy? Trouble is being stored up.