Infant Industries Protectionism: The Case of Automobile Industry in Malaysia

Dalia Ibrahim Mustafa

doi:doi:10.11648/j.ijber.20200902.12

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Infant Industries Protectionism: The Case of Automobile Industry in Malaysia

Dalia Ibrahim Mustafa

Published in International Journal of Business and Economics Research (Volume 9, Issue 2)

Received: 22 November 2019 Accepted: 24 February 2020 Published: 28 February 2020

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Abstract

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.

Published in	International Journal of Business and Economics Research (Volume 9, Issue 2)
DOI	10.11648/j.ijber.20200902.12
Page(s)	68-72
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Infant Industry, Protectionism, Malaysia, Tariffs, and Quotas

References

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[2]	Ali, Salamat. (2011). "Why have most cases of infant-industry protection failed to generate benefits in terms of economic development?". London School of Economics and Political Science. Working paper.
[3]	Baldwin, R. E. (1969). The case against infant-industry tariff protection. Journal of Political Economy, 77 (3), 295-305.
[4]	Borer D. and B. Chua. (2018). How costly is the Malaysian car? Estimations of Welfare Costs of Protecting the Vehicle Industry of Malaysia. Conference paper. 2018 International Conference on Technology and Humanities IcoTECH 2018 in Cooperation with KDU University College Penang November 17-18, 2018.
[5]	Chang, H. J. (2003). Kicking away the ladder: Infant industry promotion in historical perspective. Oxford Development Studies, 31 (1), 21-32. https://www.tandfonline.com/doi/pdf/10.1080/1360081032000047168?needAccess=true
[6]	Cordon W. (2002). "Trade Policy and Economic Welfare". Second Edition. Clarendon Press. Oxford. New York. United States of America.
[7]	Encyclopædia Britannica: Friedrich List.
[8]	Feenstra, R. C. and Taylor, A. M. (2002). International Economics. 2nd international ed. Houndmills, Basingstoke, Hampshire.
[9]	Grossman G. and E. Helpman (1994). "Protection for Sale". American Economic Review. Vol 84. Pp: 833- 850.
[10]	Hausman R. and D. Rodrick (2003). "Economic Development as Self-Discovery". Journal of Development Economics. Vol. 72. Pp: 603-633.
[11]	Kicsi, R., & Buta, S. (2010). Protectionism and “Infant” Industries. Theoretical Approaches. The Annals of “Dunarea de Jos” University of Galati. Fascicle I – 2010. Economics and Applied Informatics.
[12]	Krueger, A. O. and Tuncer, B. (1982). 'An Empirical Test of the Infant Industry Argument.' The American Economic Review 72 (5): 1142-1152.
[13]	Magee, C. S. (2011). Why are Trade Barriers so low?. Economic Affairs, 31 (3), 12-17.
[14]	Mill, J. S. (1848). Principles of Political Economy in Collected Works, vols II–III.
[15]	Milward, B. (2019). International Trade and Sustainable Development: Economic, Historical and Moral Arguments for Asymmetric Global Trade. Routledge.
[16]	Ministry and International Trade and Industry, (2018). (2018). https://www.miti.gov.my/miti/resources/Media%20Release/Media_Release_-_Automotive_Outlook_2018_%E2%80%93_Holistic_Industry_Growth_Continues_As_National_Automotive_Policy_2014_(NAP2014)_Enters_Fifth_Year.pdf
[17]	Ministry of Trade, Malaysia. (2006)
[18]	Pack, H. and Saggi, K. (2006). 'Is There a Case for Industrial Policy? A Critical Survey.' The World Bank Research Observer 21 (2): 267-297.
[19]	Panagariya, A. (2011). A re-examination of the infant industry argument for protection. Margin: The Journal of Applied Economic Research, 5 (1), 7-30.
[20]	Petkov, Vladimir P. (2007). Infant Firm Subsidization in Industries with Dynamic Structure. J Ind Compet Trade.
[21]	Ravikumar, B., Riezman, R., & Zhang, Y. (2018). Optimal Infant Industry Protection. In 2018 Meeting Papers (No. 1016). Society for Economic Dynamics.
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Dalia Ibrahim Mustafa. (2020). Infant Industries Protectionism: The Case of Automobile Industry in Malaysia. International Journal of Business and Economics Research, 9(2), 68-72. https://doi.org/10.11648/j.ijber.20200902.12

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ACS Style

Dalia Ibrahim Mustafa. Infant Industries Protectionism: The Case of Automobile Industry in Malaysia. Int. J. Bus. Econ. Res. 2020, 9(2), 68-72. doi: 10.11648/j.ijber.20200902.12

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Dalia Ibrahim Mustafa. Infant Industries Protectionism: The Case of Automobile Industry in Malaysia. Int J Bus Econ Res. 2020;9(2):68-72. doi: 10.11648/j.ijber.20200902.12

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@article{10.11648/j.ijber.20200902.12,
  author = {Dalia Ibrahim Mustafa},
  title = {Infant Industries Protectionism: The Case of Automobile Industry in Malaysia},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {2},
  pages = {68-72},
  doi = {10.11648/j.ijber.20200902.12},
  url = {https://doi.org/10.11648/j.ijber.20200902.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200902.12},
  abstract = {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.},
 year = {2020}
}

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TY  - JOUR
T1  - Infant Industries Protectionism: The Case of Automobile Industry in Malaysia
AU  - Dalia Ibrahim Mustafa
Y1  - 2020/02/28
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200902.12
DO  - 10.11648/j.ijber.20200902.12
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 68
EP  - 72
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200902.12
AB  - 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.
VL  - 9
IS  - 2
ER  -

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Author Information

Dalia Ibrahim Mustafa

Department of Islamic Banking, School of Shari'a (Islamic Studies), the University of Jordan, Amman, Jordan

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APA Style

Dalia Ibrahim Mustafa. (2020). Infant Industries Protectionism: The Case of Automobile Industry in Malaysia. International Journal of Business and Economics Research, 9(2), 68-72. https://doi.org/10.11648/j.ijber.20200902.12

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ACS Style

Dalia Ibrahim Mustafa. Infant Industries Protectionism: The Case of Automobile Industry in Malaysia. Int. J. Bus. Econ. Res. 2020, 9(2), 68-72. doi: 10.11648/j.ijber.20200902.12

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AMA Style

Dalia Ibrahim Mustafa. Infant Industries Protectionism: The Case of Automobile Industry in Malaysia. Int J Bus Econ Res. 2020;9(2):68-72. doi: 10.11648/j.ijber.20200902.12

Copy | Download

@article{10.11648/j.ijber.20200902.12,
  author = {Dalia Ibrahim Mustafa},
  title = {Infant Industries Protectionism: The Case of Automobile Industry in Malaysia},
  journal = {International Journal of Business and Economics Research},
  volume = {9},
  number = {2},
  pages = {68-72},
  doi = {10.11648/j.ijber.20200902.12},
  url = {https://doi.org/10.11648/j.ijber.20200902.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20200902.12},
  abstract = {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.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Infant Industries Protectionism: The Case of Automobile Industry in Malaysia
AU  - Dalia Ibrahim Mustafa
Y1  - 2020/02/28
PY  - 2020
N1  - https://doi.org/10.11648/j.ijber.20200902.12
DO  - 10.11648/j.ijber.20200902.12
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 68
EP  - 72
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20200902.12
AB  - 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.
VL  - 9
IS  - 2
ER  -

Copy | Download