Drawback of Government Policies in Economic Growth

In a recent analysis of a developing economy, the government of Country X implemented multiple policies aimed at fostering economic growth. These policies included significant investment in infrastructure, tax incentives for foreign direct investment (FDI), and subsidies for local businesses in high-tech industries. Despite these initiatives, economic growth has remained stagnant, leading policymakers to consider further changes.

Economists have raised concerns about the impact of government intervention in the market, suggesting that while the policies are well-intended, they may be creating distortions in resource allocation. In light of this context, which of the following statements best represents a potential drawback of the government’s approach to economic growth?