The Modern World Economy Essay Example | Topics and Well Written Essays - 2000 words

The Modern World Economy - Essay Example The essay "The Modern World Economy" talks about infant argument claims in terms of the modern world economy and analyses the experience in this question of different countries. The experience of West Germany, the United States, Japan and South Korea suggests that governmental support in promoting infant industries did assist efficient industrialization processes to some extent. However, the experiences of other countries, mainly the developing countries, seem to suggest that protection policy has been frequently abused. Therefore, it is not surprising to find a large body of literature which exhibits considerable skepticism concerning the success of infant industry protection in developing countries. The effective rate of protection has been high for most import-competing industries for a long time and export performance has been poor, with most of them being orientated towards the domestic market. Recent writings in the theory of international trade suggest that IS and EP industrial strategies are not mutually exclusive. For example, Krueger (1995, p. 207) have argued that these two strategies are sequential rather than being alternatives and they can be compatible rather than separate strategies. They have further asserted that IS is needed not only for creating export ability, but also for providing the volume basis necessary for competitive exportation. Indeed, this is the core of the infant industry argument. Empirically this view has been supported by South Korea's success in its policy of pursuing both EP and IS strategies simultaneously.