International Economic Essay Example | Topics and Well Written Essays - 1750 words

International Economic - Essay ExampleThis would ensue customers to prefer the elderly high society than the new wiz and and so the infant fabrication would be trapped in a bestial cycle and in the end would stomach to close down.The infant diligence argument is regarded as one of the greatest arguments of justification known. The argument claims that newly developed small familys should be granted both(prenominal) protection for their survival. The new firms have real little chance of competing with the already established and flourishing old firms in the developed countries that is why they require some sort of protection to en equal to(p) their survival. The already established industries have more exposure to the world and have greater intimacy of the ways of production, market, labor etc and be able to sell their goods at a lower price in the multinational market without suffering whatever kind of loss, in fact for a greater profit.On the other hand, a firm prod ucing the similar product in a relatively new setup industry would not have the corresponding production technologies available to it. The employees and the management would pretermit the experience and knowledge. A head on competition with the old industries, would make them a cripple and they might have to close down.Now narrowing it down to the international scenario, we see that developing countries are the ones that need the protection more. They lack the basic resources required to establish an industry and even if established they have little resources or talent to keep it thriving. Instead they become dupe to the developed countries, and skunk not meet their standard of production, quality, expertise etc. The under developed nations lack human resources and therefore can not develop the natural ones. As the porter model suggests the accessibility of raw material can not give an industry a competitive edge until and unless we are able to develop and upgrade them. However the third world country lacks the modern technology and knowledge base that the developed countries possess. Therefore no matter how hard they fight, no matter what advertising policies they adopt, it is very difficult for them to come up to the mark and challenge the old firms. Thus the laws of humanity suggest that some sort of protection must be apt(p) to infant industries for the purpose of their survival. These protections can be given in many forms. For instance, Quotas. For many years, the textile industry of Pakistan, India and Bangladesh have been given subsidies. Also protection can be given in the form of import tariffs. With this the domestic price of the goods allow for rise and the imports will decrease from the rest of the world. If the prices are raised within a certain limit then the firm would be able to cover its high production costs and then remain in business. afterward a span of some years, these firms would acquire more experience and knowledge which in t urn would lead to them being able to produce more cheaply. The firms would then do the same things that the developed country firms did and thus would be able to improve even more. So protection in simple words, gives an infant industry time to settle into the fast paced world. Furthermore since the firms production efficiency would improve, the