Of a new product may be very high. Few workers possess the skills needed to produce the good and procure other required inputs (such as communication networks or financing arrangements), which may be similarly underdeveloped. These difficulties are ameliorated as expanding production of the good yields progressively larger pool of trained workers and a better-developed set of necessary service. Likewise, the improve availability of inputs causes the costs of all firms within an infant industry to decline. For example, the development of electronics in California’s Silicon Valley or along routes 128 and 495 in Boston was undoubtedly aided by such cost-reducing economies stemming from the growing concentration of related firms in these areas.
Infant industries play an important role in discussions of international trade policy. Because new industries have high costs, it is argued, they may not be able to compete against lower-cost, foreign competition. Given adequate costs would fall and eventually, firms would be able to meet foreign competition. This argument undoubtedly has held some validity in the past. For example production of the U.S. textile industry in the early nineteenth century helped to make it become the world’s largest. Today however the argument is often exploited by industries only wanting protection from foreign competitors. Detailed research is required to determine whether they really meet the conditions of an infant industry.