Politics

The Global Turn Away From Free-Market Policies Worries Economists

Meeting outside Paris last week, top officials from France, Germany and Italy pledged to pursue a coordinated economic policy to counter stepped-up efforts by Washington and Beijing to protect their own homegrown businesses.

The three European countries have joined the parade of others that are enthusiastically embracing industrial policies — the catchall term for a variety of measures like targeted subsidies, tax incentives, regulations and trade restrictions — meant to steer an economy.

More than 2,500 industrial policies were introduced last year, roughly three times the number in 2019, according to a new study. And most were imposed by the richest, most advanced economies — many of which could previously be counted on to criticize such tactics.

The measures are generally popular at home, but the trend is worrying some international leaders and economists who warn that such top-down economic interventions could end up slowing worldwide growth.

The sharpened debate is sure to be on display at the economic lollapalooza that opens Wednesday in Washington — otherwise known as the annual spring meetings of the International Monetary Fund and the World Bank.

From left, Adolfo Urso of Italy, Bruno Le Maire of France and Robert Habeck of Germany vowed to coordinate their economic policies.Credit…Yoan Valat/EPA, via Shutterstock
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