According to the ______ argument for protection tariffs can shield new industries from import competition until they have grown strong and efficient enough to withstand the competition by foreign producers.
|a. scientific tariff argument|
b. infant industry argument
c. beggar they neighbor argument
d. foreign dumping argument
The Correct Answer Is:
b. infant industry argument
The correct answer is b. infant industry argument. Here is why.
The infant industry argument is an economic theory that suggests that certain industries in a country may need protection from international competition when they are in their early stages of development.
The term “infant industry” refers to a new and emerging industry that has not yet reached a level of maturity and efficiency to compete effectively in the global market.
The rationale behind this argument is that established industries in other countries may have economies of scale, advanced technology, and experience that give them a competitive advantage.
To allow the infant industry to grow and become competitive, protectionist measures like tariffs can be imposed to shield them from the full force of international competition.
By providing temporary protection, such as tariffs, subsidies, or import quotas, the government aims to create a nurturing environment for the infant industry to develop. Once it reaches a certain level of maturity and efficiency, it should be able to compete on a level playing field with foreign producers.
This argument is often associated with the ideas of economists like Alexander Hamilton, Friedrich List, and John Stuart Mill, who recognized the need to protect nascent industries in order to build a diverse and self-sufficient economy.
Explanation of Why Other Options Are Incorrect:
a. scientific tariff argument:
The term “scientific tariff argument” is not a well-known or widely accepted economic theory or concept. It doesn’t have a recognized meaning in the field of economics.
Therefore, it cannot be the correct answer in this context.
c. beggar thy neighbor argument:
The “beggar thy neighbor” argument is a different economic theory altogether. It suggests that a country can improve its own economic situation at the expense of its neighbors. This can be achieved through actions like devaluing one’s own currency to make exports cheaper and imports more expensive.
It is not directly related to the protection of infant industries. Instead, it focuses on policies that might give one country a short-term advantage but can potentially harm other nations in the process.
d. foreign dumping argument:
The “foreign dumping argument” relates to a specific trade practice where foreign producers sell goods in another country at prices lower than their production cost or lower than what they sell the same goods for in their home market.
This is considered unfair competition, and countries may impose anti-dumping duties to counteract this practice. While this is an important aspect of international trade, it is distinct from the concept of protecting infant industries.
In contrast, the infant industry argument is centered around providing temporary protection to new and emerging industries within a country.
rationale behind this argument is that established industries in other countries may have certain advantages that make it difficult for new industries to compete initially.
By shielding these infant industries from full international competition, they can grow and become competitive in the long run.
In summary, the incorrect options either represent economic theories and practices that are not directly related to protecting emerging industries, or they are terms that do not have a recognized meaning in the context of international trade and economics.
infant industry argument, on the other hand, is a well-established concept in economics that addresses the specific need to protect nascent industries.