Infant industry
Encyclopedia
In economics, an infant industry is a new industry
, which in its early stages is unable to compete with established competitors
abroad.
Governments are sometimes urged to support the development of infant industries
, usually through subsidies or tariffs. One of the first acts of the US Congress was to impose tariffs on a variety of imports including cotton, leather, and various forms of clothing, in an effort to protect the American textile industry
. But now in accordance with the situation in 2003 before the U.S. Congress was presented an Action Plan, designed to boost the textile industry. Economists argue that state support for infant industries is only justified if there are external benefits
.
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
, which in its early stages is unable to compete with established competitors
Competition (economics)
Competition in economics is a term that encompasses the notion of individuals and firms striving for a greater share of a market to sell or buy goods and services...
abroad.
Governments are sometimes urged to support the development of infant industries
Infant industry argument
The Infant industry argument is an economic rationale for trade protectionism. The core 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...
, usually through subsidies or tariffs. One of the first acts of the US Congress was to impose tariffs on a variety of imports including cotton, leather, and various forms of clothing, in an effort to protect the American textile industry
Textile industry
The textile industry is primarily concerned with the production of yarn, and cloth and the subsequent design or manufacture of clothing and their distribution. The raw material may be natural, or synthetic using products of the chemical industry....
. But now in accordance with the situation in 2003 before the U.S. Congress was presented an Action Plan, designed to boost the textile industry. Economists argue that state support for infant industries is only justified if there are external benefits
Externality
In economics, an externality is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit...
.
See also
- Infant industry argumentInfant industry argumentThe Infant industry argument is an economic rationale for trade protectionism. The core 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...
- IndustryIndustryIndustry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
- ProtectionismProtectionismProtectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...