CandleFocus Glossary Editor
The Infant-Industry Theory is a concept that has been used throughout history to protect newly emerging industries from outside competitors during their critical early stages. The goal of this theory is to give these newly born industries the best chance for survival and growth, and eventually make them competitive in the global marketplace.
In the early 19th century, the infant-industry theory was introduced by both Alexander Hamilton and Friedrich List, who proposed a set of policies which would help developing countries nurture the early stages of their new industries. These policies would act as both protective and supportive measures to ensure that these companies would have the best opportunity to become successful.
The infant-industry theory states that foreign competition should be kept out at first, in order to allow domestic firms to establish their foothold in the industry and gain competitive advantages. In order to achieve this, governments can take measures such as enacting import duties, tariffs, quotas, and exchange rate controls. All of these measures can provide essential protection to the domestic industry, such as a higher price structure of goods, or a beneficial currency exchange rate to help increase exports.
Ultimately, the goal of the infant-industry theory is to help early formative industries survive and then eventually reach a point of competitiveness in the global market. This is a long and challenging process which takes time and dedication, but if done properly it can help a country become a leading exporter of goods and services in the global trade market.
To summarize the infant-industry theory, it is a concept that proposes specialized policies to emerging industries to give them the opportunity to become competitive in the global market. It seeks to protect these early formative companies from foreign competition until they are able to become independent and successful on their own. The results of this theory can be quite beneficial, as it can help developing countries become successful exporters on the global market, as well as foster the development of the local industries for their own domestic advancement.
In the early 19th century, the infant-industry theory was introduced by both Alexander Hamilton and Friedrich List, who proposed a set of policies which would help developing countries nurture the early stages of their new industries. These policies would act as both protective and supportive measures to ensure that these companies would have the best opportunity to become successful.
The infant-industry theory states that foreign competition should be kept out at first, in order to allow domestic firms to establish their foothold in the industry and gain competitive advantages. In order to achieve this, governments can take measures such as enacting import duties, tariffs, quotas, and exchange rate controls. All of these measures can provide essential protection to the domestic industry, such as a higher price structure of goods, or a beneficial currency exchange rate to help increase exports.
Ultimately, the goal of the infant-industry theory is to help early formative industries survive and then eventually reach a point of competitiveness in the global market. This is a long and challenging process which takes time and dedication, but if done properly it can help a country become a leading exporter of goods and services in the global trade market.
To summarize the infant-industry theory, it is a concept that proposes specialized policies to emerging industries to give them the opportunity to become competitive in the global market. It seeks to protect these early formative companies from foreign competition until they are able to become independent and successful on their own. The results of this theory can be quite beneficial, as it can help developing countries become successful exporters on the global market, as well as foster the development of the local industries for their own domestic advancement.