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What are infant industries?

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This question pertains to topics in Microeconomics, such as International Trade and Industrial Policy.


Infant Industries: These are new or emerging industries that have not yet gained the economies of scale, technological know-how, and market exposure of their more established competitors, typically in more developed nations. These industries often struggle to compete on the international stage without some form of protection or assistance.

Detailed Explanation:

An infant industry is one in the early stages of development with potential for significant growth and the ability to benefit the wider economy in the future. However, due to lack of experience, technology, and scale, they are unable to compete effectively with mature industries abroad. As a result, they may need government support to nurture them until they are mature enough to compete internationally. This support can take many forms, including tariff protection, subsidies, or tax breaks.

The infant industry argument is a rationale for trade protectionism. The argument suggests that young industries need protection from international competition until they have developed and matured to the point where they can compete on equal terms. However, this argument is not without its critics who argue it can lead to inefficiencies and be hard to withdraw once an industry has become accustomed to it.


The US Steel Industry in the 19th Century: In the early stages of its development, the American steel industry was an infant industry, struggling to compete with more mature European steel industries. The US government implemented high tariffs to protect the domestic industry, allowing it to grow and eventually compete on the world stage.

Emerging Tech Companies:
New tech startups in sectors such as AI or green energy can be seen as infant industries. They are typically characterised by high initial costs, and considerable technological and market uncertainties. To help these industries grow and compete internationally, governments may offer various forms of support such as grants, subsidies or protective legislation.


An infant industry is a new or emerging industry that lacks the economies of scale, technological sophistication, and market familiarity of its more established competitors. As such, they may require government support or protection to grow and eventually compete on an international scale. The infant industry argument provides a rationale for this protection, although it is not without critics. Real-world examples include the US steel industry in the 19th century and emerging tech startups in sectors like AI and green energy.

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