Question

The infant industry argument contends that countries should impose trade barriers (such as tariffs) in order to protect new industries. The logic is that, while domestic countries within a particular industry may not be competitive with foreign producers now, they will be within a few years as companies develop more experience and technology. There are successful examples of this (Toyota was an infant immediately after WWII) and unsuccessful examples of this (the Malaysian car industry comes to mind). Should countries protect infant industries? Are there any industries in the U.S. that we should protect? Is there a way for countries to avoid mistakes when protecting infant industries?

Answer 1

Solution :- (1) Infant industry means a new industry which experiences difficulty or incapable competiting with other competitors in its starting stage of the industry, Yes, countries protect infant industries. Gout helps in developing and poorecting the at industries at their starting stage thoough tariffe and subsidiel Tariffs are imposed by the govt in various forms of imports of goods such as clothing, that will protect the textile industries of viso subsidies are indirect, as in when import duties are imposed against the material which are imported. to But the economist helps only if the infant Industores provides external benefits. The domestie infant Industry is competitive and experiences dynamic effects that are external to firms the competitive

foreign industry produces a good that is an imperfect substitute for the infant industries good. But the port can protect the infant inclustries using subsidies, tariffs or quotas to increase the domestic welfare over time. Hence the infant industries should be Given protection, once when the competitors ano withdraw the benefits of their Industries. (2) The infant industries must be protected 1. They must be regulated property and ensure that they mature. If the infant industries are not regulated properly the benefits given to the industries need to be withdrawn because it may lead to misleading countries also need to be more attentive to impose tariff barriers to importing of goods will often have opportunity of retaliatory barriers to their exports • So, infant industries protection is intented to . help the countries. - Thanking you - - pls like to support -