Import-Substituting Industrialization Problems with the Infant Industry Argument It is not always good to try to move today into the industries that will have a comparative advantage in the future Example: In the 1980s South Korea became an exporter of automobiles, whereas in the 1960s its capital and skilled labor were still very scarce Protecting manufacturing does no good unless the protection itself helps make industry competitive Example: Pakistan and India have protected their heav manufacturing sectors for decades and have recently begun to develop significant exports of light manufactures like textiles Copyright C 2003 Pearson Education, Inc Slide 10-7Copyright © 2003 Pearson Education, Inc. Slide 10-7 Import-Substituting Industrialization ▪ Problems with the Infant Industry Argument • It is not always good to try to move today into the industries that will have a comparative advantage in the future. – Example: In the 1980s South Korea became an exporter of automobiles, whereas in the 1960s its capital and skilled labor were still very scarce. • Protecting manufacturing does no good unless the protection itself helps make industry competitive. – Example: Pakistan and India have protected their heavy manufacturing sectors for decades and have recently begun to develop significant exports of light manufactures like textiles