A responsive and responsible political and economic leadership will have a number of features which focus on diluting globalization. Although the fundamental principle of free trade is paramount to the world’s political and economic systems, priorities of national or even regional systems will attempt to balance the positive effects of free trade with any adverse effects arising out of uninhibited market access to trade. How would they do so?

First, trade and free trade is only one dimension of globalization. Free trade allocates resources where there is most beneficial to the owners of production factors. On the other hand, free trade opens numerous possibilities for economic growth based on diversification, mobility (which represents the ability to mobilize production factors in different markets) and policy intervention. The latter epitomizes the need to instigate contemporary industrial policies.

This approach aims at creating framework conditions under which improvement of national or regional competitiveness would compensate where necessary for market failure. Free trade and the aftermath of globalization generates positive externalities on the economy as a whole, increasing the growth potential and the vibrancy of the economic fabric, fostering innovation and training as a result of increased demand for skills. In this perspective, industrial policy plays a key role by concentrating on strategies, the creation of a favorable environment and clear support to key investments that can generate growth.

Secondly, a responsive and responsible political and economic leadership will have the hallmarks of a contemporary and fit-for-purpose industrial policies across the world which harnesses the benefits of free trade whilst balances the negativities of the ensuing industrial reorganization. Such industrial policies across the world should be interoperable and aim at the following tasks.

(I) To set out the boundaries within which industry and enterprise can flourish. Failure to set this framework correctly can lead to risks for the public, or to the waste of industrial resources and the frustration of entrepreneurial initiative.

(II) To ensure that the conditions are present for industry to develop and to realize its competitive potential. The availability of technology, skills, an educated workforce, a positive attitude to risk-takers, finance and the other conditions which form a truly competitive and innovative business environment have to be the active concern of a responsive and responsible global leadership.

(III) To ensure that the frameworks, institutions and instruments that are necessary for the business environment and for industry are able and capable to accommodate contemporary societal needs and requirements.

Globalization and free trade serve national interest partially. They enhance the global economic performance but leave behind a socio-economic vacuum in need of redress.

The response of global leaders to the adversities of globalization should not reflect nor lead to protectionism. Instead, a model of responsive and responsible leadership must embrace the positive dynamics of industrial policies and offer the solutions to the challenge of the new world order.

The author is a professor of EU and international business law at the University of Hull Business School.