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nAnswers to Textbook Problems
1. The countries that seem to benefit most from international trade include many of the countries of the
Pacific Rim: South Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, and others. Though
the experience of each country is somewhat different, most of these countries employed some kind
2. The Japanese example gives pause to those who believe that protectionism is always disastrous.
However, the fact of Japanese success does not demonstrate that protectionist trade policy was
3. a. The initial high costs of production would justify infant industry protection if the costs to the
b. An individual firm does not have an incentive to bear development costs itself for an entire
4. India ceased being a colony of Britain in 1948, thus its dramatic break from all imports in favor
5. In some countries, the infant industry argument simply did not appear to work well. Such protection
will not create a competitive manufacturing sector if there are basic reasons why a country does not
have a competitive advantage in a particular area. This was particularly the case in manufacturing
© 2012 Pearson Education, Inc. Publishing as Addison-Wesley
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