Why Tariffs And Protectionism Kill Innovation

Tariffs don’t actually protect an economy, they slowly suffocate innovation. Economies need "Creative Destruction”. Dr. Carmelo Ferlito, CEO of the Center For Market Education, joins BFM Enterprise to unpack the macroeconomic consequences of building economic walls.

Looking through the lens of Joseph Schumpeter’s theory of "creative destruction," Dr. Ferlito argues that tariffs distort entrepreneurial calculation, breed rent-seeking behavior, and artificially keep inefficient "zombie firms" on life support at the expense of true innovation.

Learn about:

• The Illusion of Protection: Why constantly shifting tariffs erode institutional predictability, causing businesses to freeze their hiring and investment decisions.

• The "Zombie Firm" Epidemic: How protectionism traps valuable capital and talent in outdated legacy businesses rather than allowing them to flow to new, better opportunities.

• Invention vs. Innovation: Why an idea created in isolation is just an "invention" until it gets the scale, human capital, and financial backing to hit the market as an "innovation."

• The Government's True Role: Why the state must act purely as a referee ensuring fair play and contestable markets, rather than a player trying to pick winners.

• A Playbook for Malaysia: Why a highly integrated economy like Malaysia must double down on unilateral openness, genuine zero-tariff trade agreements, and protecting people (via social safety nets and reskilling) rather than protecting firms.

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