Question

Domestic producers require time to gain experience and lower their unit costs; this will allow these producers to compete successfully in international markets. This statement describes the ________ argument for protectionism.

Answer 1

Answer:

The correct answer is infant industry.

Explanation:

The nascent industry argument is an economic justification for trade protectionism. The heart of the argument is that nascent industries often do not have the economies of scale that their older competitors in other countries can, and therefore need to be protected until they can achieve similar economies of scale. The argument was first fully articulated by Alexander Hamilton in his 1790 Report on Manufactures, was systematically developed by Daniel Raymond, and was later picked up by Friedrich List in his 1841 work on the National System of Political Economy, after his exposure to the idea during his residence in the United States in the 1820s.