Final answer:
States can protect infant industries through tariffs, trade quotas, and financial incentives designed to shield young sectors from international competition, allowing them to grow domestically. Direct subsidies to industries are preferable as they aid growth without burdening consumers. Identifying good candidates for protection involves assessing their growth potential and ability to compete globally.
Step-by-step explanation:
States can protect infant industries primarily through tariffs, trade quotas, and financial incentives. For instance, protectionism measures like tariffs on imported goods safeguard these younger sectors from international competition, allowing them to grow domestically. On the other hand, direct subsidies provide financial support to select industries, which can be more advantageous than tariffs or quotas because they more directly assist the growth of the industry without imposing costs on domestic users of the product. However, successful implementation of infant industry protection can be challenging; industries have sometimes never reached full profitability and the removal of protective measures can be slow. For a government to identify good candidates for infant industry protection, it needs to consider several key characteristics such as potential for growth, the ability to eventually compete on a global scale, and technological innovation capacity. However, rapidly changing industries like computers are not ideal candidates for infant industry protection because of the speed of innovation and global scale of competition, which make it more difficult for new firms to catch up to established players.