Infant Industry Argument

The Infant Industry argument is the argument that some industries can have a comparative advantage but just need time to grow first, but they need protecting in the meantime.

Certain industries possess a possible comparative advantage but have not yet exploited economies of scale. Short-term protectionism allows the "infant industry" to develop its comparative advantage at which point the protection can be relaxed, leaving the industry to trade freely on the international market.

For example, South Korea put a bubble around their Car Industry by putting high tariffs on car imports (In the 1970s).

This means that domestic consumers purchase South Korean cars instead of imported cars since they are cheaper. After a while (2010s), South Korean Car manufacturers have grown larger and now have Economies of Scale. South Korea then removes the bubble of protection around them since they are now able to rival global firms. If there was never a bubble around them, they would be unlikely to have been able to compete with global competition and gone bust.