Is Infant Industry in Vietnam A Good Idea Essay

Is Infant Industry in Vietnam A Good Idea - Essay Example The researcher states that international trade is deemed as one of the essential steps towards success in the global industry. It is also expected that trade liberalization could alleviate poverty rate in the country. On the downside, there will always be an increasing demand from developed, First World countries towards excessive liberalization of foreign imports and investment. In some cases, free trade has been helpful for China and Taiwan, albeit with some violations and tremendous criticisms. At the international forefront, it has received a tremendous setback such that the Doha trade talks had been stalled while governments block the acquisition of foreign companies. Only a tip-in of the iceberg, Vietnam is faced with the need to broaden and widen its free trade defenses while maintaining its infant industry towards economic and improvement of rural development in the countryside. Aimed at protecting an industry, or a country in this particular scenario, the infant industry is an argument claiming the need for, as well as allowing, small firms in underdeveloped or developing countries to have a protection mechanism or policies against large, well-established, and well-developed industries or countries. Because new firms, particularly in developing countries, are not yet capable to go on a head-to-head battle with well-recognized business establishments from developed countries, the infant industry argument allows a developing country to impose a protective tariff, or tax, to imported goods and products. When this occurs, imported goods are obliged to increase prices, thus making them less competitive as compared to those local businesses in developing economies. In return, local businesses are able to gain a strong footing in their local economy until such time that it could achieve a sufficient size and obtain a significant economy of scale.