Panle Barwick

Shipbuilding Subsidies Bought China Market Share at a High Domestic Cost

Shipbuilding’s history shows that a country can rapidly build production capacity without securing a lasting commercial advantage. In a discussion with Steven Davis, economists Panle Barwick and Myrto Kalouptsidi argue that the U.S. wartime surge did not overcome cost and productivity gaps, while China’s rise to market dominance came with substantial losses to its own economy. Their central policy lesson is that output and market share are not enough to justify subsidies: support must address a specific market failure or serve a clearly stated objective, such as national security.