(no subject)

[timelets]

“...Japan, Korea, Taiwan and China perfected ways to marry subsidies and protection for manufacturers – so as to nurture their development – with competition and ‘export discipline’, which forced them to sell their products internationally and thereby become globally competitive. This overcame the traditional problem with subsidy and protection policies, whereby entrepreneurs pocketed financial incentives but failed to do the hard work of producing competitive products. Firms were not able to hide behind tariff and other barriers and sell only to a protected domestic market because protection, subsidies and credit were conditioned on export growth. Firms that did not meet the export benchmark were cut off from state largesse, forced to merge with more successful companies, or occasionally even bankrupted.”

Joe Studwell. “How Asia Works.”

- On the one hand, you want to subsidize(finance) and protect promising unprofitable companies, so that they overcome the initial biz/tech handicap;
- On the other hand, you don't want to subsidize and protect unprofitable companies, so that they grow inefficient and require either direct or indirect subsidies/tariffs.

This dilemma is inherent in startups as well, and it's addressed through a similar (isomorphic!) VC solution. It also helps understand what enabled Amazon to solve the Innovator's Dilemma.

BTW, it shows that Russian industrial policy is doomed because of sanctions imposed on the country due to Putin's stupid foreign policy.