infant industry

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.

infant industry

a newly established industry developed either by private-enterprise interests or set up by governments, often in DEVELOPING COUNTRIES, as part of their INDUSTRIALIZATION programmes. New industries are often subsidized by the government and/or protected from import competition in the hope that in due course they can exploit economies of scale and thus eventually withstand foreign competition. Infant industries are often cited as a legitimate’ area for the application of PROTECTIONISM, but policy in this area is often open to abuse. See ECONOMIC DEVELOPMENT.