The Life Cycle Of Strategic Industries In Developing Countries, With Tariff Protection Research

All countries in the world choose certain industries to protect. Developing countries often choose important infant industries that relative to national economy and livelihood of the masses. China is now in the course of industrialization, developing industry is the main task. At the same time, China is going to enter the WTO. Facing the intense economy competition from the developed countries, we must pay attention to protect our infant industries, and more attention should be pay to make use of protective tariff when non-tariff barriers are forbidden by and by after entering the WTO. However, protective tariff is a double edged sword, protective tariff of appropriate measure will benefit to promote the development of infant industries, on the other hand, protective tariff beyond appropriate measure will run counter to our desire. At present, we are facing the same problem: how to lay down an appropriate tariff to promote the development of infant industries such as automobile industry? Moreover, should we protect all the infant industries in our country? Which infant industry should we choose to protect? How can we judge a certain industry be in its infant-period? Study to answer these questions is needed by government who lays down the policy and promotes the development of economy. The essay brings up a theory of strategic industry life period and protective tariff after criticizing and succeeding the List's infant industry protection theory. The writer considers that object industries to be protecting by means of tariff by developing countries are not all the infant industries, but infant-strategic industries. They have two patterns, one is infancy, and another is strategy. The paper divides the infant-period into two periods: child-period and juvenile-period. Also, the strategic-industries have their adult-period and senile-period. All these four periods constitute the whole developing course of a strategic industry. By means of international- competition-power index and gross-product-increase-speed index, the essay divides these four periods, provides a quantification basis for judging a strategic-industry be in its infant-period or not. At the same time, the writer brings up the formula to decide the tariff according to the period of the strategic-industry. At the end of the essay, the writer analyzes the car industry of China by the theory, the result is, the car industry of China is in its juvenile-period----the later half of the infant-period, the appropriate measure of tariff is about 60 percent. So the writer suggests the government to cut down the car tariff which is too high for our car industry.