International Journal of Business and Economics Research
Volume 9, Issue 2, April 2020, Pages: 68-72
Received: Nov. 22, 2019;
Accepted: Feb. 24, 2020;
Published: Feb. 28, 2020
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Dalia Ibrahim Mustafa, Department of Islamic Banking, School of Shari'a (Islamic Studies), the University of Jordan, Amman, Jordan
Having a competitive advantage in infant industry is a vital factor for a country to be efficient in protecting it since usually those infant industries lack the economic scales needed to survive in the market. The protectionism started in eighteenth century in USA as a suggestion for the government to promote the economy. The paper covers several tools are used such as; tariffs and tariff rebates, quotas, governmental subsidies and import-substitution industrialization (ISI). Theoretically it was proved the possibility of achieving the desired results. Then the paper illustrated Malaysia as a case of study that faced several failed stories of providing protection of its automobile infant industry; Proton and Perdua automobile companies were investigated. The results showed that those policies and tools used became a burden on the government budget without being able to compete internationally after decades of protection. Many reasons behind this shock fact such as the tendency of being secure which yield to conceal the truth of being prepared to face the global market competition without protection shields from the government. Also, those countries provided protectionism slowed down economically which led to more obstacles for the protected infant industries to be competitive internationally. Even the efforts of connecting the infant industry with strategic foreign partner have failed miserably in Malaysia. Hence as a recommendations for future attempts of protecting infant industries; the time span of protection should be predetermined and be flexible to adjust simultaneously. In addition, the government should monitor the protected firms to let them disclose the truth. Also, there should be a mix of protection tools used to achieve the optimal goal which is not only to protect the infant domestic industries but to promote them and be internationally competitive and that result can be reflected in growth of the economy.
Dalia Ibrahim Mustafa,
Infant Industries Protectionism: The Case of Automobile Industry in Malaysia, International Journal of Business and Economics Research.
Vol. 9, No. 2,
2020, pp. 68-72.
Copyright © 2020 Authors retain the copyright of this article.
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