Final answer:
The Defense Industry Initiative was created to proactively address issues of fraud and corruption in the defense sector by promoting ethical practices and preventing more stringent government regulations. The initiative arose within a context where industries often exercised significant influence over politics and where trade protectionism was debated, especially in the form of the infant industry argument.
Step-by-step explanation:
True, the Defense Industry Initiative (DII) was established in response to concerns about fraud and corruption in the defense sector. This initiative was seen as a way to prevent additional governmental regulations by promoting ethical business practices within the industry itself.
Historically, industries have wielded significant power and influence, at times resorting to bribes to secure legislation in their favor. Notably, defense contractors, in attempts to secure military budgets and contracts, made substantial political donations that were perceived to be attempts to gain unwarranted influence, a scenario which President Eisenhower warned against as the Military-Industrial Complex.
The broader context includes issues related to trade protectionism, such as the infant industry argument, which justifies temporary support for new industries to help them become established. However, this rationale has often been misapplied to protect well-established industries with strong political ties, rather than the nascent sectors it was designed to help.