Page 213 - Global Political Economy_Understanding The International Economic Order

CHA PTER E IGHT
can provide an acceptable rationale for trade protection. An infant
industry is one that, ifprotected from international competition, will
become sufficiently strong and competitive to enable it to survive
when protection is eventually removed. A major problem with infant-
industry protection, however, is that protection too frequently be-
comes permanent. Another important problem is that no theoretical
or other means exists to determine whether or not a particular infant
industry, ifprotected, could eventually achieve a competitive position
in world markets. Only a trial-and-error process can determine the
long-term competitiveness ofa protected industry. Nevertheless, as I
pointed out in chapter seven, most successes attributed to industrial
policy and strategic trade policy are really examples ofsuccessful in-
fant-industry protection.
From eighteenth-century mercantilists to present-day protection-
ists, advocates oftrade protection have desired to achieve certain po-
litical, economic, and other objectives more than the economic bene-
fits for the entire society of free trade. However, the specific objectives
sought by protectionists have varied over time and space. Economic
nationalists regard trade protection as a tool ofstate creation and
statecraft; for example, a trade surplus is considered beneficial for
national security. Many representatives ofless developed countries
believe that trade with industrialized countries is a form of imperial-
ism; they fear that free trade benefits only the developed economy
and leads to dependence ofthe less developed countries on the devel-
oped ones. Opponents offree trade in developing economies also in-
clude advocates ofthe “developmental state” who believe that the
state rather than free markets should have the principal role in the
process ofeconomic development. In developed economies, propo-
nents of trade protection reject free trade and other forms of global-
ization as threats to jobs, wages, and domestic social welfare; orga-
nized labor in industrialized countries increasingly advocates
protection against imports from low-wage economies with inade-
quate labor standards. In recent decades, more and more environmen-
talists have denounced trade as a threat to the environment. Many
liberals (in the American sense ofthe word) have come to believe that
trade violates human rights and encourages child labor. Unfortu-
nately, the forces in developed countries that are opposed to free
trade, especially in the United States, gained considerable momentum
in the 1990s.
The most systematic economic rationale for economic nationalism
and trade protection was provided by Friedrich List, a German who
fled to the United States in the middle ofthe nineteenth century to
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