Asked by Alyssa Everett on Apr 29, 2024
Verified
Evaluate the validity of the argument that a new industry (infant industry)in a nation needs protection from foreign competition if it is to establish itself.
Infant Industry
A new or emerging industry that may be protected by the government from international competition to allow it to grow and establish itself.
Foreign Competition
The competitive pressure that domestic companies face from the products and services offered by foreign firms in the same market.
- Examine the impacts and financial implications of tariffs and quotas on global trade.
- Evaluate the efficiency of tariffs versus quotas in restricting imports.
Verified Answer
IH
ibrahim hossenMay 02, 2024
Final Answer :
The infant-industry argument is based on the idea that new industries need time to become mature and sufficiently strong and large to compete with more mature industries from other nations. These new industries may need temporary protection to gain productive efficiency and become low-cost producers of a product. There are some logical problems with this argument. For instance, it is difficult to determine which industries are capable of achieving economic maturity and therefore deserve protection. Also, protective tariffs may persist even after industrial maturity has been realized. Most economists believe that if infant industries are to be subsidized, there are better means than tariffs for doing so.
Learning Objectives
- Examine the impacts and financial implications of tariffs and quotas on global trade.
- Evaluate the efficiency of tariffs versus quotas in restricting imports.