ABSTRACT
This argument has great appeal for countries in an early stage of industrialization who are eager to develop a modern industrial sector. They fear that their attempts to develop new industries will be defeated by vigorous price competition from already established firms in advanced industrial countries such as the United States, Germany, and Japan. Early in American history Alexander Hamilton forcefully advocated the infant-industry argument in his Report on Manufactures.5 It served as a rationale for the protective tariffs imposed in 1815 after Britain lifted the blockade of the United States that it had imposed during the war of 1812. Industries that had sprung up during the war feared the ravages of competition with the more advanced industries of Europe. Friedrich List made similar arguments in favor of a protective tariff in the United States and in Germany; later in the century, as Bismarck unified the separate German states and sought to expand their industrial capacity, he granted protection to the iron, steel, coal, and textile industries.
