Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

13.4.1 Advantages of Protection: 
Following arguments have been placed forward in favour of 
Protectionism. They all support the establishment of Protection as 
the accepted trade policy by the nations; These arguments are : 
(i) The infant Industry Argument. 
(ii) Diversification of Industry Argument. 
(iii) The Employment Argument. 
(iv) Conservation of National Resources. 
(v) The Defence Argument. 
(vi) Key Industry Argument. 
(vii) Patriotism Argument. 
(viii) Self-Sufficiency Argument. 
(ix) The Revenue Argument 
(x) Fair Economic Life Argument. 
1. The Infant Industry Argument 
The staunch supporter was J.S.Mill. According to him only 
the infant industry argument is sound for adopting Protectionism in 
Theory and Practice of International Trade. To quote Mill: "A -
protective duty continued for a reasonable time; might sometimes 
by the best convenient mode in which a nation can tax itself for the 
support of such an experiment (introducing new industries ). But it 
is essential that protection should be confined to cases in which 
thered is good ground of assurance that the industry which it 
fosters, will after a time be able to dispense with it. " 
This argument has received wide acceptance. In spite of its 
criticisms this has been accepted by many countries like USA,UK 
and India. 
2. Diversification of Industry Argument 
This argument was favoured by many German and American 
Economists : Frederich List, a German Economist also favoured 
this argument. For the rapid development of the economy a country 
must have varied sources of income, production when there is 
employment. Balanced growth is only possible when there is 

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diversification of Industry and resources. If a country depends on a 
few industries then it is dangerous for her stability and 
independency. 
Diversification 
of 
resources 
provide 
ample 
opportunity to the labourers to. move from one place to another. 
Diversification also helps in creation of new industries, which in 
consequent creates new employment opportunities. 
This argument has been criticised on the ground that it 
removes the specialising tendencies and the importance of the 
principle of comparative costs which are established for the 
specialisation of a country in the production of certain commodities.