Encouraging new economic enterprises

One means of supporting newly developing industries, as in high technology for example, is to protect the national industry against imports from abroad. Reasons put forward for such protection include: the need to assist new industries through the learning period (when the local industry cannot compete with already established foreign firms); the advantages arising from external benefits such as technical spin-offs.

1. Provided governments are well informed and pursue the public well-being in a disinterested way, their judgement on spin-offs is necessarily superior to markets because market prices cannot capture genuine externalities.

1. If an industry cannot attract adequate capital to see it through its learning period there is either a weakness in the capital market or investors evidently cannot be convinced that the industry offers a competitive rate of return. It is implausible that the capital markets of the industrial nations suffer from such weakness. Investors can make mistakes, because of misinformation or inadequate information, but there is no reason why governments should be less likely to do so, when their economic vision may be clouded by political requirements.

1. Developing new economics
2. Counselling economic ventures

1. Initiating diversified new industries
2. Fostering small business
3. Encouraging local commercial enterprises

1. Establishing new industries
2. Describing need for production schemes

1. Protecting vulnerable industries
2. Protecting against overseas imports

1. Uneconomic