The Infant Industry Argument: Tariffs, NTMs and Innovation

Igor Bagayev and Ronald Davies

No 201703, Working Papers from School of Economics, University College Dublin

Abstract: One rationale for the infant industry argument is that, by protecting domestic firms from foreign competition, this increases rents and investment in innovation and other growth enhancing measures. Using data on 4,750 firms across 13 developing countries, we examine whether protection via tariffs or non-tariff measures (SPS and TBT specifically) increase innovation in either products or processes. We find no such evidence; instead we find a small negative impact of protection, particularly tariffs and TBTs, on innovation.

Keywords: Non-tariff measures; Technical barriers to trade; Innovation; Infant industry (search for similar items in EconPapers)
JEL-codes: F12 F13 H57 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2017-01
New Economics Papers: this item is included in nep-ino, nep-int and nep-tid
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http://hdl.handle.net/10197/8364 First version, 2017 (application/pdf)

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