Infant industry argument

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Infant industry argument

Argument that industries in the developing and emerging sectors of the economy need protection against international competition in order to establish themselves.

Infant Industry Argument

A policy position stating that new industries developing in a country need government protection. That is, the infant industry argument states that a government must subsidize these industries and/or protect them through tariffs. Proponents of this argument note that several East Asian tigers used this policy following World War II with a great deal of success. Critics maintain that these policies are capital intensive and not all states can afford them. It could also lead to retaliatory moves in countries to which a country seeks to export. See also: Import-substitution industrialization.
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Consider, for example, the infant-industry argument, once supported by John Stuart Mill, who eventually recanted after an avalanche of criticism.
Henry Sidgwick, himself an advocate of the infant-industry argument, wrote that "the gain that protection might bring in particular cases is always likely to be more than counterbalanced by the general bad effects of encouraging producers and traders to look to government for aid in industrial crises and dangers, instead of relying on their own foresight, ingenuity and energy" (p.