Final answer:
Direct subsidies to key industries can be more advantageous than tariffs or quotas as they support industries without price distortion or provoking trade disputes. Governments may select industries with growth potential and competitive advantage as candidates for infant industry protection, but industries with rapid innovation cycles like computers may not qualify.
Step-by-step explanation:
Direct subsidies to key industries can be preferable to tariffs or quotas as they provide support without distorting market prices or leading to international trade disputes. Subsidies, such as direct government payments, loans, targeted tax reductions, and support for research and development, can enhance industry competitiveness while minimizing negative impacts on consumers. Conversely, tariffs and quotas can increase the cost of imports, leading to higher prices for consumers and potential retaliation from trade partners.
To identify good candidates for infant industry protection, governments may look for sectors that have a high potential for growth and competitive advantage but require time to develop. For example, industries with significant economies of scale or those that benefit from technological learning effects might be good candidates. Industries like computers, however, may not be ideal for infant industry protection due to their fast-paced innovation cycles and the global nature of the industry, which requires them to be competitive at the outset.