But is the cost of these “weapons” finally prohibitive in relation to the benefits obtained by the states that have adopted this new “arsenal”?
Two recent investigations show that the cost is very high and capable of causing significant tremors in the mechanisms of those who chose to use these “weapons.”
Pandora’s box seems to be opening …
The first research comes from the Federal Reserve Bank whose analysts, looking at the costs and consequences of U.S. export controls aimed at limiting the sale of high technology to China, conclude that these controls do limit China’s access to high technology, but at the expense of American companies and American jobs.
According to their calculations, the export controls result in a loss of approximately 130 billion dollars for the U.S. high-tech industry. These losses caused a significant decrease in bank lending, as well as an equally significant decrease in employment.
The second research comes from the International Monetary Fund, which has long since begun to analyze the effectiveness, but mainly the effects of industrial policy “imposed” by geopolitical reasons.
Of course, one must clarify that the IMF has never been a fan of state subsidies, which are a dominant component of geopolitical industrial policy.
These government subsidies, the IMF reports in its research, are often misallocated, or better yet, are distributed based on political goals, causing a number of market distortions.
Of course, all this does not apply to the largest shareholder of the IMF, the USA.
The IMF in the case of the U.S. appears to be embracing its official position that investments focused on green energy are beneficial. One would say that the IMF is turning a blind eye to the USA that everything is fine in their case.