Infant industry argument

Description

Please note that the content of this book primarily consists of articles
available from Wikipedia or other free sources online. The Infant
industry argument is an economic rationale for protectionism. The crux
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. The argument was first explicated by Alexander
Hamilton in his 1790 Report on Manufactures, was systematically
developed by Daniel Raymond, and was later picked up by Friedrich List
in his 1841 work The National System of Political Economy, following his
exposure to the idea during his residence in the United States in the
1820s. Many countries have successfully industrialized behind tariff
barriers. For example, from 1816 through 1945, tariffs in the USA were
among the highest in the world. According to Ha-Joon Chang, „Almost all
NDCs had adopted some form of infant industry promotion strategy when
they were in catching-up positions. In many countries, tariff protection
was a key component of this strategy, but was neither the only nor even
necessarily the most important component in the strategy.