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In: Economics

Why are industries like computers not good candidates for infant industry protection? Can you suggest some...

Why are industries like computers not good candidates for infant industry protection? Can you suggest some key characteristics of good candidate?

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Expert Solution

The infant Industry argument is given by Alexander Hamilton in 1790. It is a concept of trade protectionism. This argument is adopted in order to protect the infant industries. The nancent industries does not enjoy the economies of scale as their other competitors in other countries have ,so these industries need to be protected . The protection is necessary till these infant industries attain the same economies of scale.

As we know that computer industry doesn't fall in the infant Industry category. The computer industry is a very large industry through out the world. This industry is having a good deal of economies of scale. The computer Industry is not an up and coming industry. It has the vast customer base and it is facing the market ups and downs efficiently.

The infant Industry can be understood with the help of an example. Consider a country that traditionally imports cars from overseas and has no domestic production of cars. The creation of a domestic automotive industry would be an example of an infant industry. The steel industry of india is also a good candidate of infant Industry. An advantage would be the ability for the infant industry to grow without competition. Another important candidate of infant Industry is new industry set up in a country.

Hope you got the answer.

Kindly comment for further explanation.

Thanks ?

Rahul Sunny answered 2 years ago
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