Infant Industry Protection

Infant Industry Protection and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Infant Industry Protection: Temporary import protection intended to help an industry that is not fully developed become established and competitive in world markets. The economic justification for infant industry protection is the prospect of decreasing costs as output expands and experience in production is acquired, which puts start-up firms at a competitive disadvantage vis-à-vis established world producers in the industry. Article 18 of the GATT permits LDCs to protect infant industries, but the restricting country may be required to compensate other GATT members that are adversely affected. See also import substitution.