MAN 4602 Lecture Notes - Lecture 7: Uruguay Round, General Agreement On Tariffs And Trade, Infant Industry Argument
Document Summary
This chapter described how the reality of international trade deviates from the theoretical ideal of unrestricted free trade reviewed in chapter 6. While a policy of free trade may not always be the theoretically optimal policy (given the arguments of the new trade theorists), in practice it is probably the best policy for a government to pursue. In particular, the long-run interests of business and consumers may be best served by strengthening international institutions such as the wto. A common political argument for intervention is that it is necessary to protect jobs. Man 4602: this can be a risky policy; if it fails, the result can be higher trade barriers. The infant industry argument for government intervention contends that to let manufacturing get a toehold, governments should temporarily support new industries: in practice, however, governments often end up protecting the inefficient. The completion of the uruguay round of gatt talks and the establishment of the world.
