Question

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.

Answer 1

The most important reason why some countries subsidize high-tech industries, such as wide-body airplanes, is because their governments believe that these industries create positive externalities to other industries. (option C)

Step-by-step explanation:

The most important reason why some countries subsidize high-tech industries, such as wide-body airplanes, is because their governments believe that these industries create positive externalities to other industries. Positive externalities refer to the spillover effects that high-tech industries have on other sectors of the economy, such as job creation and technological innovation.

By subsidizing these industries, governments aim to promote economic growth and development, as well as enhance the competitiveness of their economies in the global market.

It should be noted that while political influence and infant industry protection may also play a role in subsidizing high-tech industries, positive externalities are considered the most important reason.