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Apparently, W. Arthur Lewis, Paul Rosenstein Rodan and Ragnar Nurkse all thought that the issue of returns of scale was important to development. All three, however, defend some sort of protectionism - which seems to be a deliberate reduction of the scale of the market. Is this truly a contradiction or am I missing something here?
Broadly speaking, they defended protectionism to give domestic industries an initial boost, with the hope that those industries could later expand and also stand on their own two feet. Our videos on trade will look more closely at whether this works, but overall the empirical record here has not been so strong. Even if you wanted to support domestic industry, export subsidies have a stronger record than trade protectionism.