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13. Suppose you are appointed as a policy maker at the Ministry of Industry and Trade
and you are subject to domestic pressures (from lobbies) to protect an inefficient
domestic industry, and to external pressures to liberalize that industry, what would
be your reaction? Build your decision upon investigating the different variables
likely to be affected



Answer :

GinnyAnswer

Final answer:

Government faces complex decisions balancing domestic and external pressures in industry policy-making.


Explanation:

Domestic pressures: If pressured to protect an inefficient domestic industry, the government may consider offering subsidies to mitigate negative effects.

External pressures: Facing pressure to liberalize the industry, the government would need substantial information about cost structures, market characteristics, and trade policies to make informed decisions.

Political economy issues: Political pressures and the need for temporary protection to avoid long-term inefficiencies are crucial considerations for policy-making.


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