The paper 'Are Passive Industry Policies More Effective Than Anticipatory Industry Policies' is a great example of a Macro and Microeconomics Case Study. Since the beginning of the global financial crisis in 2007, government institutions and industries around the world have initiated policies that are directed towards stimulating their economies (Taibbi, 2011). Governments in Asia, Europe and in the Americas that traditionally had eschewed industrial policies have resorted to numerous but selective interventions with the objectives of ensuring that their economies were not only revived but also improving in the wake of the global crisis (Hart & Tindall, 2009).
The difference in the economies in westerns societies and those of emerging markets such as India and China lies in the decision to adopt passive or anticipatory policies in reviving their economies (Nayak, 2013). The main objective of this paper is to access the extent passive industry policies are more effective compared to the anticipatory policies. This will be discussed with the examples from the recent Global Financial Crisis which began in 2007. Passive industry policy vs. anticipatory industry policy Crisis management Passive industry policy is an approach towards the development of policies that takes away the power of choice from policymakers.
Instead, this approach to policy heavily relies on the judgment and objectives of the individuals involved in the development of the policies (Taibbi, 2011). These are policies that are meant to handle industrial challenges when they occur. Passive policies are essential considering that they enable members of organizations to not only. Passive policies industry policies require very little or some cases no government involvement (Subramanian, 2011). The adoption of passive global policies by countries such as the United States such as a general reduction in business regulations considering that such interventions are aimed at improving on the techniques through which more Americans can engage in business initiatives as a way of creating more employment opportunities (Hart & Tindall, 2009).
The outstanding difference between anticipatory industry policies and passive industry policies lies in the fact that the former is more predictive and is not engaged in crisis management (DeLeo, 2014). Inasmuch as anticipatory industry policies are predictive measures that are often used to provide the effective solutions to possible societal challenges, it is important to note that there are times when such policies are less predictive of the actual situation and this may lead to a crisis as in the case of the global financial crisis of 2007 (Taibbi, 2011).
This crisis which began in the US was a product of anticipatory industry policies that were developed by the US government to facilitate many American homeowners in the acquisition of mortgages in the form of credit (Nayak, 2013). However, these homeowners faced the challenge of repaying their mortgages, and loss of confidence in the American home market by investors led to a credit crunch and a liquidity crisis (Nayak, 2013).
From this argument, it is possible to argue that unlike passive industry policies that act in accordance with the rules while solving problems, anticipatory industry policies failed to manage the crisis falsify their ability in the sustainable development of the economy (Subramanian, 2011).
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