While industrial policy can fuel innovation if done right, the International Monetary Fund said history was “full of cautionary tales of policy mistakes [and] high fiscal costs”.
Already a subscriber?The International Monetary Fund is urging Western governments to exercise caution as they plough hundreds of billions of taxpayer dollars into subsidies for green and high-tech industries, warning history is littered with failed and costly forays into industry policy.
“Most industrial policy relies heavily on costly subsidies or tax breaks, which can be detrimental for productivity and welfare if not effectively targeted,” the Washington-based IMF warned in its latest fiscal monitor on Wednesday. While industrial policy can fuel innovation if done right, the IMF said history was “full of cautionary tales of policy mistakes, high fiscal costs and negative spillovers”.
While industry policy could help reach net zero emissions by investing in technologies that do not yet exist, the IMF said subsidies needed to be transparent and complemented by carbon pricing to keep the cost to taxpayers low. Research and development expenditure made up just 1.8 per cent of Australia’s GDP in 2019 compared to the OECD average of 2.7 per cent.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
China at ‘fork in the road’ on reforms to boost demandIMF head Kristalina Georgieva says the world is heading for subdued growth.
Read more »
Government’s industrial relation laws ‘difficult to interpret’ for businesses and workersGovernment’s industrial relation laws ‘difficult to interpret’ for businesses and workers
Read more »
Industrial manslaughter laws are still new to many parts of Australia, and convictions are rareA tragedy at a gold mine in Ballarat this week has shone the spotlight on industrial manslaughter laws, and the low rates of convictions in Australia.
Read more »
Industrial property sales slump, but agents predict online shopping-powered warehouse boomDespite investment deal volumes in the industrial property sector slumping by 26 per cent in the past 12 months, agents predict the growth of internet shopping and data storage will send transactions soaring next year.
Read more »
Industrial action expected to cause peak-hour delays on Adelaide trainsAdelaide commuters are being warned to brace for peak-hour disruptions, with industrial action set to cause disruptions across multiple days.
Read more »
Australian households are world-leaders in interest rate pain: IMFVariable-rate mortgages and high household debt make Australian consumers highly sensitive to interest rates, the IMF says, but house prices are still rising.
Read more »