Why did the infant industry policy of protectionism and other subsidies work fairly well in East Asia? An early

1990 World Bank study offered three guidelines to countries thinking about infant industry protection:

1. Do not hand out protectionism and other subsidies to all industries, but focus on a few industries where

your country has a realistic chance to be a world-class producer.

2. Be very hesitant about using protectionism in areas like computers, where many other industries rely on

having the best products available, because it is not useful to help one industry by imposing high costs on

many other industries.

3. Have clear guidelines for when the infant industry policy will end.

In Korea in the 1970s and 1980s, a common practice was to link protectionism and subsidies to export sales in

global markets. If export sales rose, then the infant industry had succeeded and the government could phase
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