Phase IFoundation
Background
Overview
Understanding excess industrial capacity is vital for comprehending global trade imbalances, the causes of trade protectionism, and the challenges faced by manufacturing sectors worldwide. It impacts international economic stability and can influence a country's industrial policy and trade relations.
Excess industrial capacity refers to a situation where an industry's actual production is significantly below its potential production capacity, leading to an oversupply of goods in the market. This often results in downward pressure on prices and can trigger trade disputes as countries seek to offload surplus production internationally.