From Chapter 10 Of The Text, Pages 227-228, Answer

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1- Questions #4, What is the infant industries argument for putting up barriers to imports? What are its merit & weaknesses? The Infant industry argument is the argument that a new industry most of all in developing countries, needs protection until it reaches a competitive level of cost and production in world markets. This is applicable when an “infant” industry, uncompetitive against foreign rivals, can lower its costs over time and become competitive in the future. That theory justifies that the State government can do whatever is appropriate to assist the “infant” industry, this implies that he can subsidies the industry to reduce the costs or use barriers to protect it. This argument has few weaknesses. First, among all government assistances, the best form of assistance is not a tariff or other barrier to imports. Rather, a subsidy to initial production or to cost reductions sources is over time usually the best policy. Second, most of the time, for a promising industry, there is no need for any government assistance to the initial firms. It would be much better if these firms could borrow from private lenders to cover their initial losses and repay these loans from future profits. If there are defects in the lending markets, then the government could extend loans. If the industry will create external benefits, such as training workers or new technologies, then the best government policy acts directly on the source of the external benefits (for instance, subsidies to training, or subsidies to research and development). Third, the argument could be misused because there are too many uncertainties, as indeed the industry could grow up, or not. And its cost could decrease, for sure or increase. This is too speculative. 2- Questions #6, What is the national defense argument for putting up barriers to imports? Why is import protection probably not

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