Question

In: Operations Management

Explain why the Infant-Industry argument is valid.

Explain why the Infant-Industry argument is valid.

Solutions

Expert Solution

An Infant industry term is used in economics to describe an industry that is newly established and in the developing stage. These industries lack experience for competition with the larger organization or Industries which produce same kind of stock or goods. These Industries lack competitiveness, Efficiency, and has a high vulnerability to market situations.

Infant Industry argument is a theory in International Trade which states that new industries require protection from international competitors till these industries become mature and stable and they have the potential to compete.

Infant Industry Argument was coined by Alexander Hamilton when he argued for the protection of US-based industries from Europe Industries.

The various reasons behind the Infant Industry Argument.

  • To encourage the production of various goods
  • To assure them with security for the production and reduce the import of goods from abroad.
  • To get foreign companies to invest in them.
  • To encourage the consumption of locally produced goods
  • To create employment to the locals
  • To generate various types of jobs for the locals in that particular area.

Infant Industry Argument is really helpful for the industries that are newly established.

For example, If there is any startup that is newly established or created which produces goods that re unique in that country but the same goods are available in various countries at lower prices.

If this is not protected, And the governments or people encourage using foreign goods produced by the organizations. This will impact the industry in the local area and ends up shutting the company.

Goods that are imported from the foreign may be very less in cost but all the people get habituated using the imported items. This will create less market for the local business and shows the impact on the revenue generation for that area.

Using locally produced items improves the economy of the country and also creates lot of opportunities.

Hence, Based on the above points we can conclude that the Infant Industry Argument is valid.


Related Solutions

5. Explain why the infant-industry argument is valid. 6. Explain one reason why the U.S. dollar...
5. Explain why the infant-industry argument is valid. 6. Explain one reason why the U.S. dollar has higher value than the Indian Ruppies in the international exchange rate marketplace. 7. write out one major difference between a country's balance of trade(BOT) and Balance of Payment (bop). 8. Explain the reason why loans to a country are entered on the Credit Side of that country's Balance of Payment account. 9. Why does the supply of a country's currency increase if/when the...
Explain the infant industry argument for the trade restrictions. (TYPE IT!!) Why do the economists doubt...
Explain the infant industry argument for the trade restrictions. (TYPE IT!!) Why do the economists doubt that the infant industry argument is a good argument for the trade restrictions? Explain in your own words. (TYPE IT!!) Under what conditions the infant industry argument for the trade restrictions may be a good argument? Explain. (TYPE IT!)
Explain the difference between a valid argument and a sound argument, and give an example of...
Explain the difference between a valid argument and a sound argument, and give an example of each.
1. a) What, exactly, is the ‘infant industry’ argument, in theory? b). What are some of...
1. a) What, exactly, is the ‘infant industry’ argument, in theory? b). What are some of the potential flaws of the ‘infant industry’ argument, in theory?
IS THE INCOMPETENCY TO STAND TRIAL A VALID ARGUMENT FOR THE DEFENSE TO PRODUCE? EXPLAIN YOUR...
IS THE INCOMPETENCY TO STAND TRIAL A VALID ARGUMENT FOR THE DEFENSE TO PRODUCE? EXPLAIN YOUR POSITION.
1. Define validity and soundness. 2. Explain why a valid argument can never have all true...
1. Define validity and soundness. 2. Explain why a valid argument can never have all true premises and a false conclusion. 3. Are invalid arguments weak? Explain your answer.
Suppose the economy is in a recession. Which of the following is a valid argument for...
Suppose the economy is in a recession. Which of the following is a valid argument for using expansionary fiscal policy, instead of monetary policy? Select one: a. Fiscal policy is more effective than monetary policy in a deep recession b. Fiscal policy is slower than monetary policy c. Fiscal policymakers are subject to more political influence, so some of their spending tends to be wasteful. d. Government spending could lead to lower growth through the crowding-out effect
1) What does it mean to say that an argument is valid?
1) What does it mean to say that an argument is valid?
Chapter 8 ARGUMENTS AGAINST FREE TRADE I. Chapter Overview Protect infant industry argument II. Chapter Summary...
Chapter 8 ARGUMENTS AGAINST FREE TRADE I. Chapter Overview Protect infant industry argument II. Chapter Summary 1. Some traditional arguments against free trade including infant industry argument, terms of trade argument, balance of trade argument, fair competition argument and national security argument are discussed in this chapter. 2. Infant industry argument holds that the home country industry which is getting a "late start" may possess a long run comparative advantage if protection could temporarily be given to the industry. III....
2.Frederich List, an-early 19th-century German economist, is famous for making the so-called “infant industry” argument. He...
2.Frederich List, an-early 19th-century German economist, is famous for making the so-called “infant industry” argument. He wrote:Had the English left everything to itself—'Laissez faire, laissez aller', as the popular economical school recommends—the [German] merchants of the Steelyard would be still carrying on their trade in London, the Belgians would be still manufacturing cloth for the English, England would have still continued to be the sheep-farm of the Hansards, just as Portugal became the vineyard of England, and has remained so...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT