There are several criticisms of the infant industry argument: Infant industry protectionism may encourage industries to be inefficient . Developing industries that have protection may lack the incentive to be efficient and competitive. Infant industry protectionism may result in retaliation from other countries.
What is the infant industry argument quizlet?
What is meant by the infant industry argument? The blocking of imports for a short time, to give the affected industry time to mature, before eventually it starts competing on equal terms in the global economy .
What is the infant industry argument exactly?
The infant-industry theory states that new industries in developing countries need protection against competitive pressures until they mature and develop economies of scale that can rival their competitors ‘.
How do trade barriers protect infant industries and local jobs?
The nation's products become more expensive in other countries. How do tariffs work to protect infant industries? They reduce sales taxes for introductory products . They shield new industries in the early stages of their development from the competition of more mature rivals.
What are the infant industry and dumping arguments for protection are they correct?
the infant industry and the dumping arguments for protection are not correct . protection does not save jobs. free trade cost some jobs, but it also creates other jobs. it brings about a global rationalization of labor and allocates labor resources to their highest valued activities.
What is an infant industry quizlet?
What is an infant industry? a developing domestic industry that needs tariff protection . In recent years , many countries have formed customs unions that abolished tariffs and trade restrictions among its members, as well as adopted uniform tariffs for nonmember countries.
What is an infant industry as it relates to economics quizlet?
Infant-industry theory. The supposition that emerging domestic industries need protection against international competition until they become mature and stable .
What are baby industries examples?
Consider a country that traditionally imports cars from overseas and has no domestic production of cars. The creation of a domestic automotive industry would be an example of an infant industry.
Why is it difficult to stop protecting infant industries?
Why is it difficult to stop protecting them? Infant industry agreement need the time for maturity before competition by blocking import for some time . The blocking of the import is important so that the infant firm advances in equal terms for the global market.
How does the government protect infant industries?
A government planner can protect the infant industry using domestic production subsidies, tariffs, or quotas in order to maximize domestic welfare over time. ... Given such restrictions, the paper shows that quotas induce higher welfare levels than tariffs.
What is the infant industry argument for restricting trade?
The infant industry argument is an economic rationale for trade protectionism . The core of the argument is that nascent industries often do not have the economies of scale that their older competitors from other countries may have, and thus need to be protected until they can attain similar economies of scale.
What is the strongest argument used to support trade barriers?
| Term What is comparative advantage? Definition the ability to produce a product relatively more efficiently or at a lower opportunity cost | Term The most frequent argument used to support trade barriers is that they ____. Definition protect domestic jobs |
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Which of the following is a barrier to trade?
The most common barrier to trade is a tariff–a tax on imports . Tariffs raise the price of imported goods relative to domestic goods (good produced at home). Another common barrier to trade is a government subsidy to a particular domestic industry. Subsidies make those goods cheaper to produce than in foreign markets.
How infant industry is protected in WTO?
The “infant industry” clause of the WTO permits developing countries to deviate temporarily from their obligations in order to promote the establishment of a new industry by, for example, raising a bound tariff rate or imposing an import restriction on the goods which the new industry will be or is producing.
What is the unfair competition argument?
One of the strongest arguments for some degree of trade protectionism is the tendency for unfair competition to emerge , particularly in developing markets without the infrastructure to monitor their businesses and enforce penalties. This is called the unfair competition argument.
What is the most frequently used argument for placing restrictions on international trade?
A primary argument often presented to restrict trade is that trade reduces the number of jobs available domestically .
