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The Infant Industry Argument: Case Study on the Brazilian Computer Industry

Countries have always looked for methods to improve the conditions of certain industries in order to increase their gross domestic production. Many have resorted to various trade protectionist policies in the form of quotas and tariffs to drastically reduce imports to develop the domestic industry. This notion of shielding a particular industry stems from the infant industry argument. This argument supports protective policies to develop a particular industry. The argument is considered to be controversial as economists are divided over whether to support the theory or not. This paper reviews the case of the Brazilian micro-computer industry from 1971 to 1990. It studies the policies employed by the government to reduce import dependency.