Questions-Answers about trading

What is the infant-industry argument for protection from international trade?


What is protecting infant industries?

The infant-industry theory states that new industries in developing countries need protection against competitive pressures until they mature. … Developing nation’s governments may enact measures such as import duties, tariffs, quotas, and exchange rate controls to give the infant-industry time to develop and stabilize.

What are the infant industry and dumping arguments for protection are they correct?

the infant industry argument for protection is that is necessary to protect a new industry to enable it it grow into a mature industry that can compete in world markets. the argument is based on the idea of dynamic comparative advantage, which can arise from learning-by-doing.

What are the 5 main arguments in favor of restricting trade?

Trade Restriction Arguments: Job Preservation, National Security, Infant Industry, and Unfair Competition.

What are the advantages and disadvantages of protecting an infant industry?

An advantage would be the ability for the infant industry to grow without competition. But two disadvantages would be that too much protection would cause a lack of incentive in the infant industry to become more efficient and also, once that protection is provided, it is hard to withdraw it.

What are 5 reasons for protectionism?

The motives for protection

  • Protect sunrise industries. Barriers to trade can be used to protect sunrise industries, also known as infant industries, such as those involving new technologies. …
  • Protect strategic industries. …
  • Deter unfair competition. …
  • Help the environment.

What is the infant industry argument for protection?

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.

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What are the 3 main arguments for protectionism?

Arguments for protectionism

  • the protection of domestic jobs,
  • national security,
  • protection of infant industries,
  • the maintenance of health, safety and environmental standards,
  • anti-dumping and unfair competition,
  • a means of overcoming a balance of payments deficit and.
  • a source of government revenue.

What are the arguments for protection?

We may discuss both types of arguments for protection:

  • Infant Industries: ADVERTISEMENTS: …
  • Diversification of Industries Argument: …
  • Employment Protection: …
  • Employment Creation: …
  • Balance of Trade: …
  • Dumping to Reflect Low Marginal Cost of Production: …
  • Improving the Terms of Trade: …
  • Retaliation:

What are main reasons for protecting infant industries Why is it difficult to stop protecting them?

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.

What are the benefits of restricting trade?

Protecting Industries. Tariffs and quotas can protect infant industries from global competition, allowing them to grow without the threat of being snuffed out by more mature or advanced foreign companies. They can also be used to protect areas that countries consider to be strategically important.

What are three problems with trade restrictions?

What are three problems with trade restrictions? What are three reasons often given for trade restrictions? Problems are higher prices for consumers, lower number of imports, and deadweight loss incurred. Three reasons for trade restrictions are National security, Infant industry argument, anti-dumping.

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What are the arguments in favor of free trade?

Arguments for Free Trade:

  • i. Advantages of Specialization: …
  • ii. All-Round Prosperity: …
  • iii. Competitive Spirit: …
  • iv. Accessibility of Domestically Produced Goods and Services: …
  • v. Greater International Cooperation: …
  • vi. Free from Interference: …
  • i. Advantageous not for LDCs: …
  • ii. Destruction of Home Industries/Products:

What are the advantages and disadvantages of protectionism?

Advantages to trade protectionism include the possibility of a better balance of trade and the protection of emerging domestic industries. Disadvantages include a lack of economic efficiency and lack of choice for consumers.

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.

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