The Infant-Industry Argument The infant-industry argument is that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets. The argument is based on an idea called learning-bydoing.

By working repeatedly at a task, workers become better at that task and can increase the amount they produce in a given period.

There is nothing wrong with the idea of learning-by-doing. It is a powerful engine of human capital accumulation and economic growth.

Learning-by-doing can change comparative advantage. If on-the-job experience lowers the opportunity cost of producing a good, a country might develop a comparative advantage in producing that good.

India’s protection of manufacturing industries from international competition is generally regarded as a failure.

But learning-by-doing does not justify protection. It is in the self-interest of firms and workers who benefit from learning-by-doing to produce the efficient quantities. If the government protected these firms to boost their production, there would be an inefficient overproduction (just like the overproduction in Chapter 6 , here ).