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Fostering technological mastery by means of selective infant-industry protection (English)

It is not possible to make a quantitative assessment of the need for or of the merits of infant-industry promotion without empirical evidence concerning costs and benefits. This report reviews the evidence that does exist for the purpose of framing some hypotheses about policies to promote infant industries. Two types of evidence are presented: (i) recent research on technological change in developing countries has provided considerable information about the nature of the costs and benefits of infant-industry development, together with a tentative indication of the magnitude of the costs; and (ii) recently completed cross-country comparative research gives a basis for stating some tentative lessons, illustrated by the experience of the Republic of Korea, about the promotion of infant industries by means of trade policies. The paper generally concludes that selective promotion of potential infant industries is warranted only if the benefits of attaining technological mastery appear to outweigh the costs, and then only if the necessary technological effort is unlikely to be undertaken by individual producers in the absence of selective promotion.

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Citation

WESTPHAL, L.

Fostering technological mastery by means of selective infant-industry protection (English). World Bank reprint series ; no. REP Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/454291468276871539/Fostering-technological-mastery-by-means-of-selective-infant-industry-protection