Using and Abusing Government Intervention and Trade Policy

Vinod K Aggarwal

Shaping New Regional Governance in East Asia: A Common Vision for Mutual Benefit and Common Prosperity. ORUEM Publishing House, 2010

This paper goes beyond this useful but vague descriptor of “murky protectionism” to analytically consider thedifferent implications of protectionist actions. As I will argue, many governments are using the financial crisis as an opportunity to not only salvage their beleaguered economies but also create policies and use government intervention to protect their firms in some cases and create new industries. This industrial policy approach, pursued by several countries, but most egregiously by China and to a lesser extent the United States, is further tilting the uneven global playing field, making it even more challenging for firms around the world to boost their fortunes in a difficult economic environment.

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