国际贸易理论与实务（英文版）Ch.8_Argument_against_free_trade教材教学课件.pptVIP

  CHAPTER 9 ARGUMENTS AGIANST FREE TRADE Traditional Arguments against Free Trade New Protectionism The Political Economy of Trade Policy 1. Infant industry argument An argument in favor of protecting the domestic backward industries through government backing, help, and intervention. (valid as from the standpoint of enhancing the welfare of the world as a whole) The main motive is to create a level playing field. Home country industry “late start”, often do not have the economies of scale (crux of the argument) If protection temporarily, firms realize sufficient economies of scale (internal or external) Eventually per-unit costs fall, home industry becomes an exporter. At this point protection can be removed. Consumers finance the expansion, but more than repaid when the industry grows. §1 Traditional Arguments against Free Trade The argument was first explicated by Alexander Hamilton in his 1790 Report on Manufactures. The first US Secretary of the Treasury. Was later picked up by Friedrich List in his 1884 work The National System of Political Economy A leading 19th century German Economist (1755 ?– 1804) Many countries have successfully industrialized behind tariff barriers. For example, from 1816 through 1945, tariffs in the USA were among the highest in the world. Almost all NDCs [Newly Developed Countries] had adopted some form of infant industry promotion strategy when they were in catching-up positions.” But it is controversial as a policy recommendation: Even when infant industry protection is well– intentioned, infant industries may never grow up”. For example, during the 1980s Brazil enforced strict controls on the import of foreign computers in an effort to nurture its own infant“ computer industry. This industry never matured. Two problems that come up with this argument: The identification of infant industry. The industries that are likely to