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New Industries and Trade

Infant industries are those industries which are new to a particular country. Thus the software industry in India is an infant industry since, although a mature industry in the United States and Western Europe, it is new to India. Steel can also be an infant industry depending on the extent to which it is established in a given country. In fact, any industry can be an infant industry if it is new to an economy (Suranovic, 1999, p.ß1).

Government intervention can take the form of regulations requiring a certain percentage of domestic participation in companies owned by foreign companies, or otherwise restricting ownership. A number of countries participate in this type of protectionism, including Mexico. But government intervention extends well beyond merely requiring domestic participation in foreign operations (Harling, 1994, 260).

One of the most common intervention strategies is the imposition of tariffs on imported goods. These are fees that are charged on specific products entering a market that go to the government. The goal behind tariffs is to increase the price of goods entering the market so that the imported goods are priced at the same level or higher than domestically produced goods. In this way, companies cannot sell goods at artificially low prices in a foreign market merely to gain market share. If this were possible (and there are companies that continue this practice), domestic companies would be at risk; once the domestic competition is eliminated, the foreign importer would be free to raise prices to consumers.

Government intervention does not always encompass merely economic events. Sometimes, governments prevent domestic companies from exporting to certain countries for political reasons. For example, during the Cold War, Western countries generally placed limits on the type of high technology equipment that could be exported to Eastern Europe. Boycotts and embargoes have been used by governm...

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New Industries and Trade. (1969, December 31). In LotsofEssays.com. Retrieved 08:29, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1696453.html