ECO610 Discussion 2 Week 3 Infant Industry Argument

The growing economies of developing nations have been catalyzed primarily by increased participation in international commerce, which has also become a significant source of revenue for many governments. Emerging among the top global merchants are some of the world’s most populous yet relatively underdeveloped nations, such as Indonesia and South Korea.

They share several goals and objectives, including promoting home manufacturing businesses and enhancing economic growth and living conditions.

Many nations still in the process of industrialization have set their sights on fostering economic growth by preserving and expanding their manufacturing industries. The cause is the controversy about the newborn business (Anand et al., 2021). According to the baby industry thesis, emerging nations may have a potential comparative advantage in manufacturing. They may achieve that potential via an early period of protection from outside competition.

As a consequence of this, a lot of countries have tried to substitute imports with domestic production. This tactic was widely used during the 1950s and 1960s, so import levels in many nations fell directly. However, the outcome as a whole was a disappointment.

Therefore, the idea that newborn businesses should be protected does not always have merit, given that protection has helped nascent sectors thrive while unable to make them more productive.

References

Anand, J., McDermott, G., Mudambi, R., & Narula, R. (2021). Innovation in and from emerging economies: New insights and lessons for international business research. Journal of International Business Studies, 52(4), 545-559.