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The Infant Industry Argument: Tariffs, NTMs and Innovation

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  • Igor Bagayev
  • Ronald B. Davies

Abstract

One rationale for the infant industry argument is that, by protecting domestic firms from foreign competition, this increases rents and investment in innovation and other growth enhancing measures. Using data on 4,750 firms across 13 developing countries, we examine whether protection via tariffs or non-tariff measures (SPS and TBT specifically) increase innovation in either products or processes. We find no such evidence; instead we find a small negative impact of protection, particularly tariffs and TBTs, on innovation.

Suggested Citation

  • Igor Bagayev & Ronald B. Davies, 2017. "The Infant Industry Argument: Tariffs, NTMs and Innovation," Working Papers 201703, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:201703
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    File URL: http://hdl.handle.net/10197/8364
    File Function: First version, 2017
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    References listed on IDEAS

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    More about this item

    Keywords

    Non-tariff measures; Technical barriers to trade; Innovation; Infant industry;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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