Which of the following is the most important reason why some countries subsidize high-tech industries (such as wide-body airplanes)?
A) Their political influence generates rent-seeking payoffs from their governments.
B) Their governments believe that high-tech industries should receive infant industry protection.
C) Their governments believe that high-tech industries create positive externalities to other industries.
D) High-tech industrial imports are often dumped and subject to antidumping duties.

Question

Quizplus · Accepted Answer

Governments believe that high-tech industries create positive externalities to other industries, which means that the benefits spill over to other sectors of the economy. For example, the development of wide-body airplanes could lead to advancements in the aerospace industry, which could create jobs and new technologies in related industries. Additionally, subsidizing high-tech industries can help countries maintain a competitive advantage in the global marketplace, which can support economic growth and development.  The other options may also be factors, but they are not the most important reason for subsidizing high-tech industries.

Which of the Following Is the Most Important Reason Why