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Argument: Protectionism is a poor way to promote infant industries

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Supporting evidence

  • Martin Wolf, Why Globalization Works?. Yale University Press. 2004. ISBN 0-300-10777-3. pp 88. - "protection is an indirect an ineffective policy for promoting infants. Apart from the cost it imposes on consumers, it has two other seriously negative side-effects:first, it limits the new industry to the domestic market, since protection, by definition, raises returns only on domestic sales; and, second, it provides protection from the world's most potent competitors. The first limitation may not matter much for countries with relatively big and rapidly growing domestic markets (such as the United States in the nineteenth century), but it is significant for most developing countries, which have tiny markets: Nigeria's dollar purchasing power in 2000 was less than a tenth of London's. The second limitation means that, protected from effective competition, the infants almost always fail to grow up."


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