Infant industry argument

The claim of the infant industry is an economic reason for trade protectionism. At the center of this discussion is that emerging industries often do not have economies of scale that older competitors from other countries may possess, so until they can achieve the same economies of scale It is necessary to be protected. This discussion was first fully described in detail by Alexander Hamilton in 1841 by Friedrich Lees later, "1750's" Manufacturing Report "[1] systematically developed by Daniel Raymond. His work "National Political and Economic System" accepted his idea during his stay in America in the 1920s. [1]

Many countries have been successfully industrialized under tariff barriers. For example, from 1816 to 1945, US tariffs were the highest in the world. Ha Jun Chan said, "Today almost all wealthy countries use tariff protection and subsidies to develop their industry" [2].

Nevertheless, as a policy proposal, the protection of the baby industry is still controversial. Like other economic reasons for protectionism, it is often exploited by the profits seeking rent. Even if the protection of the baby industry is good, it is difficult to know which industry the government should protect, and the 'baby' industry may not 'grow' compared to foreign competitors of 'adult'. not. For example, in the 1980s, Brazil strictly regulated the importation of foreign computers to foster its own "baby" computer industry. The industry has never matured, the technical gap between Brazil and the rest of the world has actually expanded, the protected industry just copied the low end foreign computer and sold it at a high price. [3] Furthermore, countries that hinder imports often face retaliatory barriers to exports, which can harm the same industry as the aims of protection of the infant industry.

Ernesto Zedillo's report to the UN Secretary-General in 2000 recommends that "in the early stages of industrialization, certain industries will be legalized by receiving limited protection for a limited time." "But while misunderstanding the old protection model designed to foster alternative import industries", it is wrong that it is wrong that developing countries proceed to refuse the opportunity to positively train the industrial sector by proceeding extremely It pointed out. "[Four]

Baby industry statements Developing countries may not benefit from free trade. For example, their comparative advantage may be in commodity price volatility primary products. The view of the infant industry suggests that as emerging industries develop, developing countries may benefit from temporary tariff barriers. Aid helps overcome fund shortage and serious debt repayment. The growth model of Harrod Domar shows that increasing capital is an effective way to increase economic growth. For developing countries in a cycle of low growth and low savings, aid will help break down the negative cycle.

The argument of the infant industry points out that if developing countries develop new industries and try to achieve economic diversification, there is a reason to impose tariffs on imported products. In particular, there are reasons to impose customs duties on industries where a country may have a comparative advantage. In other words, if we can develop infrastructure and economies of scale, it will be relatively advantageous to achieve economic diversification and developing countries can try to develop new manufacturing industries. However, initially they may find it difficult to compete with foreign competitors. If they can not enter the capital market and it is difficult to borrow the investment, especially if the tariffs help to provide the domestic market to the new company. This will provide opportunities for emerging industries to build opportunities. Over time, emerging industries will become more efficient and will benefit from scale economies. You can lower tariffs

The claim of the infant industry is an economic reason for trade protectionism. At the center of this discussion is that emerging industries often do not have the economies of scale that older competitors from other countries may have and so until they can achieve the same economies of scale It is necessary to be protected. Alexander Hamilton first described in detail the discussion in the manufacturing report in 1790. And it was later developed systematically by Daniel Raymond who accepted Friedrich at the work "National Political Economy System" in 1841. Since then, Les accepts, and he touched this idea. I lived in America in the 1920s