Government Intervention (Cont..)
Infant Industry
- protect infant industry at home especially for developing countries
- Recognized by GATT
- Usually leads to inefficient industries (e.g, car industry in Brazil)
- In today’s world capital is easy to come by.
Strategic Trade Policy
- First mover advantage in specific industries through R&D grants
- Technology of the future and support of.
All led to the development of world trading system and GATT.