Infant-industry argument in Global Commerce Policy
In this regard, a definition of this issue is as follows: this argument proposes that if a given industry with a potential comparative advantage was accorded protection, usually in the form of tariffs, subsidies, local content requirements, bounties, etc., to allow it to establish itself, it would be able in the long run to exploit the comparative advantage without the need for special protection. The entries on trade policy in the Encyclopedia are here. One of the flaws in the argument is that if the cost of current protection is to be repaid in the future, above-average returns will be needed after the industry is established, and that is at best problematical. The entries on trade policy are here. In practice, few infant industries grow up of their own volition. The entries on trade policy are here. Instead, they tend to seek to perpetuate their protection. See also learning-by-doing argument, picking winners and strategic trade theory.
Infant-industry argumentin the wold Encyclopedia
For an introductory overview on international trade policy, see this entry.
Notes and References
- Dictionary of Trade Policy, “Infant-industry argument” entry (OAS)