---
title: "Infant Industries | International Economics"
description: "Infant industries are new sectors that get temporary protection, like tariffs or subsidies, so they can grow and compete in global markets."
canonical: "https://fiveable.me/international-economics/key-terms/infant-industries"
type: "key-term"
subject: "International Economics"
unit: "Unit 5"
---

# Infant Industries | International Economics

## Definition

Infant industries are young domestic industries in International Economics that receive temporary protection, such as tariffs or subsidies, until they can compete globally. The idea is to give them time to develop skills, scale, and efficiency.

## What It Is

Infant industries are emerging sectors in a country that are not yet strong enough to compete on equal terms with established foreign producers. In International Economics, the term usually comes up when a government tries to build domestic manufacturing or another new industry by shielding it from outside competition for a while.

The basic logic is simple: a brand-new firm or sector often has higher costs at the start. It may lack modern equipment, trained workers, supply chains, or experience making goods efficiently. If it has to compete immediately with older, more productive foreign companies, it may fail before it ever gets the chance to improve.

So governments sometimes give these industries a temporary boost. That can mean tariffs on imported goods, subsidies to lower production costs, tax breaks, or direct support for local production. The point is not to protect them forever. The goal is to let them grow until they can produce at lower cost and stand on their own.

This idea is closely tied to import substitution industrialization, where countries try to replace imported manufactured goods with domestic production. A country may decide that making its own textiles, steel, or electronics is better than importing everything, especially if it wants jobs, industrial capacity, and less dependence on foreign suppliers.

The hard part is timing. If the protection is short and targeted, the industry may mature and become competitive. If protection lasts too long, firms may stop improving because they know the government will keep them safe. That is why infant industry policy is always a trade-off between growth today and efficiency later.

A good way to think about it is this: the industry is not called an infant because it is weak forever. It is called infant because it is supposed to grow up. In a strong case, that growth shows up as lower costs, better technology, more exports, and more jobs. In a weak case, the protection just creates expensive products and industries that never become competitive without support.

## Why It Matters

Infant industries matter because they sit at the center of one of the biggest debates in International Economics: should a country protect new domestic production or let trade competition sort everything out? That question shows up constantly in development policy, especially in countries trying to industrialize faster.

The concept also helps you explain why two countries with similar resources can end up with very different industrial paths. One country may invest in temporary protection and build a manufacturing base. Another may keep trade open and rely more on imports and resource exports. Those choices can affect jobs, industrial diversification, and long-term growth.

It also connects to the export-led growth vs. import substitution unit. Infant industry protection is often part of an import substitution strategy, but it can also be used more selectively inside a broader growth plan. When you see tariffs, subsidies, or production support in a case study, infant industry reasoning may be the economic logic behind it.

The concept gives you a way to judge policy, not just label it. You can ask whether the protected sector really has a path to competitiveness, whether the support is temporary, and whether the benefits outweigh the cost of higher prices or wasted resources. That is the kind of analysis international economics expects, especially in essay and discussion settings.

## Connections

### [Import Substitution Industrialization](/international-economics/key-terms/import-substitution-industrialization)

Infant industries are one reason countries choose import substitution industrialization. Instead of depending on foreign manufactured goods, the government tries to help domestic firms produce those goods at home. The logic is that a protected industry can grow into a competitive sector, but only if the policy leads to real productivity gains instead of permanent dependence.

### Protectionism

Infant industry policy is a form of protectionism because it limits foreign competition to support domestic firms. The difference is that infant industry protection is supposed to be temporary and development-focused. General protectionism can be broader and may protect industries for other reasons, such as preserving jobs or shielding strategic sectors.

### [Trade Liberalization](/international-economics/key-terms/trade-liberalization)

Trade liberalization pushes in the opposite direction by lowering barriers and exposing domestic firms to global competition. That can be good for efficiency, but it can also make it harder for young industries to survive long enough to improve. Many policy debates turn on whether a country should open markets now or protect an emerging sector first.

### Economic Diversification

Supporting infant industries can be a way to diversify an economy beyond one or two export products. If a country relies too heavily on a narrow set of goods, it is more exposed to price swings and demand changes. Building new industries can spread risk and create more types of jobs.

## On the AP Exam

A quiz or short essay may give you a country policy and ask whether it fits infant industry logic. Your job is to identify the temporary protection, explain why the sector is not yet competitive, and say what the hoped-for outcome is, such as lower costs, better technology, or export growth.

You may also have to compare it with trade liberalization or import substitution industrialization. In a case study, look for clues like tariffs on imported manufactured goods, government subsidies, or a push to build domestic factories. If the policy seems designed to help a new sector survive long enough to become efficient, infant industries is the term you want.

## Infant Industries vs Import Substitution Industrialization

These are related, but not identical. Infant industry protection is the support given to a young sector, often through tariffs or subsidies, so it can mature. Import substitution industrialization is the broader development strategy of replacing imports with domestic production, and infant industry policy is one tool that strategy may use.

## Key Takeaways

- Infant industries are new domestic sectors that need temporary protection before they can compete with established foreign firms.
- Governments may use tariffs, subsidies, or tax breaks to give these industries time to grow and lower their costs.
- The goal is not permanent shelter, but a path to real competitiveness, innovation, and job creation.
- The biggest criticism is that protection can become inefficient if firms rely on government help instead of improving.
- This term often appears in discussions of import substitution industrialization and broader development strategy.

## FAQs

### What is infant industries in International Economics?

Infant industries are young domestic industries that receive temporary protection so they can develop enough to compete in global markets. The idea is that a sector may be too costly or underdeveloped at first, but with support it can become efficient later.

### Is infant industry protection the same as import substitution industrialization?

No, but they are closely related. Import substitution industrialization is the broader strategy of replacing imported goods with domestic production, while infant industry protection is one policy tool that can support that strategy. A country can use infant industry support without fully adopting import substitution.

### Why do governments protect infant industries?

Governments protect infant industries because new sectors often cannot compete right away with older foreign firms that already have scale, technology, and experience. Temporary protection can give local firms time to improve productivity, build supply chains, and create jobs.

### What is a downside of infant industry protection?

The main downside is that protection can become a crutch. If the industry keeps getting support, firms may have little incentive to innovate or cut costs, which can leave consumers paying higher prices and the economy stuck with inefficient production.

## Related Study Guides

- [5.2 Export-led growth vs. import substitution](/international-economics/unit-5/export-led-growth-vs-import-substitution/study-guide/1RuAtIhG1y1ple7Q)

## About This Document

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- [llms-full.txt](https://fiveable.me/llms-full.txt): complete subject and unit listing
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