[Kapanda]

When African countries tried to create industries to process their own materials they were sabotaged by western banking and lending institutions that ordered them to remove protection of infant industries in exchange for loans. Without protection for these infant industries, African industries could not compete against western industries that have centuries advancement.

I swear, I feel like a policeman going around refuting this point in PoFo.

Protectionism has no track record of helping an economy. Economists believe it actually hurts developing nations.

[Dr House]

Thought experiment, Kapanda: What do you think will happen if a Colombian entrepreneur decides to develop an aircraft manufacturing firm in competition to Boeing, Lockheed-Martin, etc.?

[Kapanda]

Quite vague question... but I'm assuming you want me to accept that he might succeed and... have his company..?

[Dr House]

No, he will probably fail spectacularly. This is because Colombia lacks the quality infrastructure, logistical base, physical plant, capital machinery and skilled labor needed to compete with its more developed peers. In order to compete it needs to develop the skills necessary to do so, it needs an infrastructure and logistical base, massive investments in new capital machinery, forced technology transfers, and the like.

Most importantly that kind of industry needs massive economies of scale before it can compete with the gigantic multinational conglomerates it opposes, which is where protectionism comes in. By instituting trade barriers and/or export subsidies shielding domestic infant industries from losses, they are allowed to grow in scale, develop a logistical base and develop the skills necessary to compete internationally, without being destroyed in the process. This of course carries the obvious risk that said industries will become permanently inefficient and dependent on subsidies and protection, so to prevent that, protections must be progressively scaled back as industry grows.

Of course, none of this is strictly necessary for Colombia, provided its wealth and wages are not a concern for you. As it stands, Colombia (and most developing countries) lack the tools to compete in capital-intensive industries, so they rely on labor-intensive ones, in which they compete using their only comparative advantage: Wages. By offering cheap labor they are able to offer their people employment in textiles and other labor-intensive industries, which is all well and good, except for the "cheap labor" part of the equation.

[Kapanda]

^ Oh, that's what you meant...

Most importantly that kind of industry needs massive economies of scale before it can compete with the gigantic multinational conglomerates it opposes, which is where protectionism comes in. By instituting trade barriers and/or export subsidies shielding domestic infant industries from losses, they are allowed to grow in scale, develop a logistical base and develop the skills necessary to compete internationally, without being destroyed in the process.

But why must a Colombian have to have an airplane company right now?

An economy that starts by exporting cheap goods and working primarily in the primary sector and with low physical capital doesn't stay stuck in that state, it never has (and not because of protectionism) - provided, of course, the legal and business system work well, no excruciating corruption or entangling bureaucracy. In the process of growing, investment, technology and capital input raise, carrying wages along with them (and of course, GDP growth and all other nice things).

[Dr House]

An economy that starts by exporting cheap goods and working primarily in the primary sector and with low physical capital doesn't stay stuck in that state, it never has

Yes it does. States without an industrial policy (not necessarily protectionism, nor protectionism alone) have never been able to capture marketshare in capital-intensive industries.

[Kapanda]

We're going 'round in circles.