An evolutionary view of the infant-industry argument

As opposed to the conventional view of the infant-industry argument as a rationale for temporary trade-impairment measures, this paper submits an evolutionary view of the argument, founded on insights from catch-up experience, as a long-run collective-learning enterprise providing a rationale for trade creation. This is operationalised by introducing system, institutional and policy learning, in addition to firm-specific learning, to complete a triad that unfolds within a multi-phased dynamic sequence eventually leading to infant-industry emergence. We factor-in radical uncertainty, complexity and path dependence, while spelling out positive and normative implications. Crucial interphase transition junctures are identified with emphasis on generative, as opposed to functional, properties.