Explain the negative effects of import-substitution policies, Microeconomics

Outline the possible negative effects of import-substitution policies.

Define and outline import-substitution; focus on reducing domestic reliance on imports by implementing high barriers to trade and channelling government resources towards specified domestic industries. The rather dismal results of import-substitution include a strong political rather than economic philosophy , focus on domestic champions which reduced competitiveness, failure to identify winning industries, squandered government resources on goods for which there was no competitive benefit, forward linkage effects and a lack of capital/ skills/ knowledge transferred from abroad.

 

Posted Date: 7/11/2013 8:29:46 AM | Location : United States







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