What's the infant industry argument in favour of protectionism?

The infant industry argument suggests that new industries need protection from international competition until they are mature and competitive.

The infant industry argument is a key economic theory that supports the use of protectionist measures, such as tariffs and quotas, to shield young industries from international competition. The argument is based on the premise that new industries, often referred to as 'infant industries', are not initially as efficient or competitive as their established foreign counterparts. This is due to several reasons such as lack of economies of scale, limited knowledge and experience, and high initial costs.

The argument suggests that if these infant industries are exposed to full international competition from the outset, they may struggle to survive and grow. This is because they may not be able to compete on price or quality with more established, efficient foreign firms. Therefore, the argument goes, these industries need a period of protection to allow them to develop and mature. This protection can take several forms, including import tariffs, quotas or subsidies.

During this period of protection, it is expected that the infant industry will invest in research and development, improve its processes and increase its efficiency. As a result, it should become more competitive and eventually be able to compete on an equal footing with foreign firms without the need for protection.

However, it's important to note that this argument assumes that the protected industry will indeed become efficient and competitive over time. Critics argue that protectionism can lead to complacency, with firms relying on protection rather than striving to improve their competitiveness. It also assumes that the government is able to identify which industries have the potential to be successful in the long run, which is not always the case.

In conclusion, the infant industry argument provides a rationale for temporary protectionism to allow new industries to develop and mature. However, its effectiveness depends on a range of factors, including the industry's potential for growth and the government's ability to implement and eventually remove protectionist measures effectively.