Empirical justification for infant industry protection

  • 38 Pages
  • 3.89 MB
  • English
World Bank , Washington, D.C. (1818 H. St., N.W., Washington, D.C. 20433)
Industrial policy -- Developing countries., Industrial promotion -- Developing countries., Tariff -- Developing count


Developing count

Statementprepared by Larry E. Westphal.
SeriesWorld Bank staff working paper ;, no. 445
LC ClassificationsHD3611 .W47
The Physical Object
Pagination38 p. ;
ID Numbers
Open LibraryOL3863082M
LC Control Number81184254

Empirical Justification for Infant Industry Protection. by L E Westphal (Author) See all formats and editions Hide other formats and editions. Price Author: L E Westphal. Additional Physical Format: Online version: Westphal, Larry E.

Empirical justification for infant industry protection. Washington, D.C. ( H.

Description Empirical justification for infant industry protection EPUB

St., N.W., Washington. Empirical justification for infant industry protection (English) Abstract This paper argues that the emiprical evidence does not disprove the efficacy of high levels of selective infant industry by: EMPIRICAL JUSTIFICATION FOR INFANT INDUSTRY PROTECTION This paper argues that the empirical evidence does not disprove the efficacy of high levels of selective infant industry protection.

The argument is based on two types of evidence. Recent research on technolo-gical change in developing countries provides considerable information about.

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Theoretically, Swiss protectionism refers to the well-known infant-industry protection argument from List ().

According to this author, a country should impose temporary custom tariffs on imports flows to protect growing Size: KB. A new empirical test of the infant-industry argument: the case of Switzerland protectionism during the 19th century Working Paper (PDF Available) July with Reads How we Author: Léo Charles.

There are very few detailed evaluations of infant-industry protection. Some important papers that explicitly take into account learning effects include Baldwin and Krugman (, ), Hansen, Jensen, and Madsen (), Head (), Irwin (), and Luzio and Greenstein ().

The infant industry argument is one of the Empirical justification for infant industry protection book arguments used to justify the protection of industries from international trade. First formulated by Alexander Hamilton and Friedrich List at the beginning of the 19th Century, the case for infant industry protection has been generally accepted by economists over the last two centuries—File Size: KB.

Keywords Infant Industry Arguments, Competitiveness, Industry Protection. Introduction One of the most important approaches to improving manufacturing competitiveness of a certain country is to protect its infant industries.

Friedrich List () defines the infant industry " as a type of industryFile Size: KB. This test is applied for the first time to test if the protectionism takes the form of an infant-industry protection.

I argue that if tariffs cause exports flow, the economy implement a protection following List’s principles. I use a highly disaggregated database of exports flow and tariffs at the product : Léo Charles.

The infant-industry theory states that new industries in developing countries need protection against competitive pressures until they mature.

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The infant-industry theory, first developed in the early 19th century, by Alexander Hamilton and Friedrich List, is often a justification for protectionist trade : Will Kenton. Abstract. Opposing arguments for free trade and protection constitute the longest-standing policy debate in the history of economic thought.

In this debate the infant-industry argument has acquired pride of place as an exception to free trade – especially as trade theory now gives more attention to explicitly dynamic analysis instead. Infant Industry protection usually takes three forms, namely that it protects and nurtures local industries such as the imposition of an import duty levy on imported goods, a quantitative restriction on imports, and granting of targeted and performance based incentivized subsidies to stimulate local production and ensure market supply.

protection mainly as a “retaliatory” measure rather than as infant industry protection (Henderson, –). THE ORIGIN OF THE THEORY The infant industry argument was the reaction to the uneven industrial development of Great BritainFile Size: KB. Most previous empirical studies of infant industries have focused on protection.

In Korea, protection was practically the most important means to promote infant industries during the s and s. The variations in the effective rate of subsidy in (Kim and Westphal, ) are dominated by those of ERP rather than other by: Léo CHARLES, "A new empirical test of the infant-industry argument: the case of Switzerland protectionism during the 19th century," Cahiers du GREThA ()Groupe de Recherche en Economie Théorique et Appliquée (GREThA).

Criscuolo, Chiara & Martin, Ralf & Overman, Henry & Van Reenen, John, appropriable by the individual firm. The familiar argument that infant-industry protection is needed because costs associated with on-the-job training cannot be recouped by the training firm is evaluated in Part III.

The existence of static and reversible externalities as a justification for temporary protection is discussed in Part IV. 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.

Though a logically tight case for infant industry protection has never been made, proprotection authors have claimed its truth since at least its statement by Alexander Hamilton in In the s and the s, the argument had receded into the background following its influential critiques by trade economists James Meade, Harry Johnson and Cited by: 7.

The Economic Argument against Infant Industry Protection. The main economic argument against infant industry protection is that protection is likely to be a second-best policy choice rather than a first-best policy choice.

The key element of the infant industry argument is the presence of a positive dynamic production externality.

founding of the infant industry argument and discusses the historic example of infant industry protection during the Industrial Revolution. Definitions and Initial Founding For the sake of clarity a definition of an infant industry or firm, derived from List’s literature, is presented below.

The WTO and infant industry promotion in developing countries: Perspectives on the Chinese large civil aircraft industry Book January with Reads How we measure 'reads'Author: Juan He.

A Critique of Infant Industry Protection, Journal of Political Economy, 17, Baldwin, R.E., Review of Theoretical Developments on Regional Integration. Paper presented at the first Project Workshop on Regional Integration and Trade Liberalization in Sub-Saharan Africa, African Economic Research Consortium, Nairobi, 2 4 December highest level of protection as measured by DRC's and the highest rate of productivity growth.

Some might argue that this unusual case could lead to spurious results.' Yet if 1Others might claim that the existence of such an outlier in fact legitimizes the case for infant-industry protection.

The infant-industry argument is about se. However, there are some lacunas in infant industry argument. First, it is assumed that protected infant industries will make efforts to lower cost when provided protection.

However, actual experi­ence shows that it is more likely that protected industries lose. protection from “retaliatory” towards infant industry protection 2. His elaboration of the infant industry argument is best articulated in the volume The National System of Political Economy, where he “offered his readers much more than a repetition of the familiar argument put forward by [other] writers”.3 Temporary trade protection, in this case, is justified to protect a domestic industry during its infancy.

Infant Industry Argument (3) Protection should, however, be removed as soon as the industry has achieved economies of scale, can meet foreign competition, and reflect the nation's long-run comparative advantage. The tinplate industry, protected by a McKinley-era tariff, is often cited as an infant industry tariff success story.

Or it was, until Doug Irwin looked closely in a famous paper, finding that “Although the tariff accelerated the industry’s development, welfare calculations suggest that protection does not pass a cost-benefit test.” After. An infant industry argument is an argument that one person cannot win a competition.

Depending to survive, they depend on the government's protectionism and largesse. At a time that is given, with. Given this information, the effective rate of protection for the Canadian automobile industry is approximately: 32 percent Exhibit Assume that the United States imports automobiles from South Korea at a price of $20, per vehicle and that these vehicles are subject to an import tariff of 20 percent.

Free Trade versus Infant Industry Promotion The Possibility of Temporary Protection for Latecomer Countries Kenichi Ohno National Graduate Institute for Policy Studies Janu 1. Introduction For Latecomer developing countries like Viet Nam, international economic integration is both an opportunity and a Size: KB.

Some people suggest that protecting an infant industry with tariffs is a [ ] Many support "Buy American" campaigns but don't have compelling economic or .Krueger and Baran Tuncer (a), a frequently cited paper attacking infant-industry arguments for protection.

The pa- per, which appeared in this Reuiew, used detailed data on Turkish manufacturing in- dustries to show that "there is no svstematic tendency for more-protected firms or indus- tries to have had higher growth of output per unit of.