Revisiting the infant industry argument

This paper identifies a flaw in the infant industry argument that previous literature has ignored. A simple model first replicates the infant industry logic but subsequently shows that, in the presence of a ‘traditional technology’ with poor growth potential, the infant-industry logic is likely to f...

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Bibliographic Details
Published inJournal of development economics Vol. 84; no. 1; pp. 104 - 117
Main Author Saure, Philip
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.09.2007
Elsevier
Elsevier Sequoia S.A
SeriesJournal of Development Economics
Subjects
Economic growth
Growth
Industrial development
Infant industry protection
Learning by doing
Protectionism
Studies
Infant industry protection
F10
F43
Growth
Learning by doing
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Summary:This paper identifies a flaw in the infant industry argument that previous literature has ignored. A simple model first replicates the infant industry logic but subsequently shows that, in the presence of a ‘traditional technology’ with poor growth potential, the infant-industry logic is likely to fail. Under protectionism domestic producers substitute advanced technologies with the low-growth alternative, thereby inhibiting learning and economic growth. Protectionism's adverse effect on development is magnified by complementarities among advanced input goods and, under adequate conditions, in a three-country setting.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0304-3878
1872-6089
DOI:10.1016/j.jdeveco.2006.10.001