This Is How Industrial Policy Can Go Bad
Odd Lots
00:00
Market Potential Depends on Income, Not Population
The dynamics of market size are often misunderstood; it is crucial to distinguish between the size of a market and its population. A large population, as seen in India, does not automatically translate to a significant market if the majority are impoverished. In contrast, smaller populations, like England's, can support much larger markets due to higher national income levels. As evidenced in historical contexts, firms may not prioritize domestic investment in low-income markets, opting instead for export opportunities, as seen with Korea and Taiwan, while other countries with small markets, like Central America and Haiti, did not follow this outward investment trend.
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