Infant Industries Term

Infant Industries Term

Infant Industries, term employed in seeking protective measures to advance and expand the industries of newly sovereign states or cushion newly established domestic industries in western countries against foreign competition during their growth to maturity. The argument in favour of (temporary) protection for infant industries is that, by encouraging a pattern of specialization different from that which would emerge under free trade, a country may eventually derive benefits that will more than compensate for the economic welfare sacrificed. But it provides no justification for what is in effect a permanent subsidy to individual industries, unless additional external economies or community benefits are expected from growth. The difficulty of assessing these economies accurately, and the probability that such measures, initially described as 'temporary' or 'emergency', may become part of the permanent fiscal structure, make the argument of doubtful value as a guide to policy.

Inferior Goods, those bought in relatively large quantities out of a small income and replaced, or bought in smaller quantities, as income increases. One of the most usual examples is margarine, which tenth to be replaced by butter as income increases. An extreme kind of inferior good is illustrated in the so-called Giffen paradox which states that less of an inferior good is bought when its price falls and more as its price rises. This can occur only when a large proportion of most individual consumers' incomes are spent on a staple foodstuff. If its price rises consumers reduce their expenditure on other foods in order to maintain their total consumption of food. Similarly if its price falls they would be able to spend more on other things and thus expenditure on it would fall.

Next Global Economic - Global Economic Analysis

Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

Economics is in the last resort a technique of thinking. The reader will therefore need to make an intellectual effort, more substantial for some web entries than for others, to get the most interest and value out of this website.