Import-Substituting Industrialization he Infant Industry Ar gument It states that developing countries have a potential comparative advantage in manufacturing and they can realize that potential through an initial period of protection It implies that it is a good idea to use tariffs or import quotas as temporary measures to get industrialization started Example: The U.S. and Germany had high tariff rates on manufacturing in the 1gth century, while Japan had extensive import controls until the 1970s Copyright C 2003 Pearson Education, Inc Slide 10-6Copyright © 2003 Pearson Education, Inc. Slide 10-6 Import-Substituting Industrialization ▪ The Infant Industry Argument • It states that developing countries have a potential comparative advantage in manufacturing and they can realize that potential through an initial period of protection. • It implies that it is a good idea to use tariffs or import quotas as temporary measures to get industrialization started. – Example: The U.S. and Germany had high tariff rates on manufacturing in the 19th century, while Japan had extensive import controls until the 1970s