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What Did Frederick List Actually Say? Some Clarifications On The Infant Industry Argument

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  • Mehdi SHAFAEDDIN

Abstract

The purpose of this study is to clarify some confusion surrounding the infant industry argument presented by Frederick List. Its main contribution is to show that List recommended selective, rather than across-the-board, protection of infant industries and that he was against neither international trade nor export expansion. In fact, he emphasizes the importance of trade and envisages free trade as an ultimate aim of all nations; he regards protection as an instrument for achieving development, massive export expansion and ultimately free trade. List´s theory was a dynamic one, with dimensions of time and geography. Makinga distinction between "universal association" and national interest, he argues that infant industry protection is necessary for countries at early stages of industrialization if some countries "outdistanced others in manufactures". Nevertheless, protection should be temporary, targeted and not excessive. Domestic competition should in due course be introduced, preceded by planned, gradual and targeted trade liberalization. List guards, however, against premature liberalization. He is aware of the limitation of size for infant industry protection but claims that in most cases this obstacle could be overcome through collaboration with other countries. To List, trade policy is not a panacea; it is an element in his general theory of "productive power" (development); industrial development also requires a host of other socio-economic measures. The infant industry argument is not only still valid, if properly applied, but, in fact, it is at present ever more relevant owing to recent technological revolution and changes in the organization of production. But despite this increased need, the means to achieving it have been restricted by international trade rules. The study also refers to significant incidences of targeted protection of production and exports in advanced countries, while universal and across-the-board liberalization is recommended for developing countries. International trade rules need to be revised to aim at achieving a fair trading system, in which the differential situations of countries at various stages of development are taken into greater consideration. Universal free trade may be easier for developing countries to implement th an a dynamic and targeted trade policy; but "easiness" is not a substitute for "soundness". It is emphasized, however, that, as List maintained, after a point in time trade should be liberalized selectively and gradually, aiming at the ultimate goal of free trade when all nations have reached the same level of development.

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  • Mehdi SHAFAEDDIN, 2000. "What Did Frederick List Actually Say? Some Clarifications On The Infant Industry Argument," UNCTAD Discussion Papers 149, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:dispap:149
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    1. Mehdi SHAFAEDDIN, 1998. "How Did Developed Countries Industrialize? The History Of Trade And Industrial Policy: The Cases Of Great Britain And The Usa," UNCTAD Discussion Papers 139, United Nations Conference on Trade and Development.
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    Cited by:

    1. Jörg Mayer, 2009. "Policy Space: What, for What, and Where?," Development Policy Review, Overseas Development Institute, vol. 27(4), pages 373-395, July.
    2. Mehdi SHAFAEDDIN, 2001. "Free Trade Or Fair Trade? An Enquiry Into The Causes Of Failure In Recent Trade Negotiations," UNCTAD Discussion Papers 153, United Nations Conference on Trade and Development.
    3. Jörg Mayer, 2013. "Towards More Balanced Growth Strategies In Developing Countries: Issues Related To Market Size, Trade Balances And Purchasing Power," UNCTAD Discussion Papers 214, United Nations Conference on Trade and Development.
    4. Christopher L. Gilbert, 2010. "Speculative Influences On Commodity Futures Prices 2006-2008," UNCTAD Discussion Papers 197, United Nations Conference on Trade and Development.
    5. Giovanni Andrea Cornia & Bruno Martorano, 2012. "Development Policies and Income Inequality in Selected Developing Regions, 1980–2010," UNCTAD Discussion Papers 210, United Nations Conference on Trade and Development.
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    14. Pilar Fajarnes, 2011. "An Overview Of Major Sources Of Data And Analyses Relating To Physical Fundamentals In International Commodity Markets," UNCTAD Discussion Papers 202, United Nations Conference on Trade and Development.
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    16. Hermans, Raine & Kamien, Morton & Kulvik, Martti & Löffler, Alicia & Shalowitz, Joel (ed.), . "Medical Innovation and Government Intervention," ETLA B, The Research Institute of the Finnish Economy, number 236, settembre.
    17. Shigehisa Kasahara, 2013. "The Asian Developmental State And The Flying Geese Paradigm," UNCTAD Discussion Papers 213, United Nations Conference on Trade and Development.
    18. Jörg Mayer, 2010. "Global Rebalancing: Effects On Trade Flows And Employment," UNCTAD Discussion Papers 200, United Nations Conference on Trade and Development.
    19. Stephany Griffith-Jones, 2014. "A Brics Development Bank: A Dream Coming True?," UNCTAD Discussion Papers 215, United Nations Conference on Trade and Development.
    20. Amelia U. Santos-Paulino, 2012. "Trade, Income Distribution And Poverty In Developing Countries: A Survey," UNCTAD Discussion Papers 207, United Nations Conference on Trade and Development.
    21. Javier Lindenboim & Damián Kennedy & Juan M. Graña, 2011. "Share Of Labour Compensation And Aggregate Demand – Discussions Towards A Growth Strategy," UNCTAD Discussion Papers 203, United Nations Conference on Trade and Development.
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    23. Filimonov, Vladimir & Bicchetti, David & Maystre, Nicolas & Sornette, Didier, 2014. "Quantification of the high level of endogeneity and of structural regime shifts in commodity markets," Journal of International Money and Finance, Elsevier, vol. 42(C), pages 174-192.

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