Which is better import substitution or export promotion?

Which is better import substitution or export promotion?

Conclusion. The use of either import substitution or export promotion to facilitate the economic development of a country has its merits and demerits. While import substitution provides protection to nascent industries, export promotion exposes these infant industries to competition.

Can import substitution be a good option to meet local demand?

Import substitution is the idea that blocking imports of manufactured goods can help an economy by increasing the demand for domestically produced goods. The logic is simple: Why import foreign-made cars or clothing or chemicals when one could produce those goods at home and employ workers in doing so?

What is disadvantage of import substitution policy?

By the 1960s, ISI strategies were seen to have significant drawbacks. Although results varied from country to country, general trends included production that often did not extend into industries other than consumer goods, slow employment growth, agricultural-sector decline, and minimal productivity growth.

What is import led growth?

It is well known that in the case of developing countries, imports of oil, essential inputs and technology are crucial to increase productive capacity and growth. Therefore, import may also be an engine of growth. This assertion is hypothesized as the import-led growth (ILG) strategy.

How does import substitution compare with export-led growth quizlet?

How does import substitution compare to export-led growth? Import substitution seeks to develop local industries to produce items that the country had been importing, whereas export-led growth seeks to develop local industries that can compete in specific niches in the world economy.

Is export-led growth good?

From a review of the literature we find that the empirical evidence regarding the relationship between exports and growth is not robust, and although the results of the study suggest that exports have a positive effect on the overall rate of economic growth and could be considered an “engine of growth” as the ELGH …

Why is import substitution bad?

Import substitution can impede growth through poor allocation of resources, and its effect on exchange rates harms exports.