Question

Discuss import substitution and its relation to industrialization

Answer 1

In simple words, import substitution refers to an economic and trade policy in which a country plans to replace foreign imports through domestic production. Therefore, in import substitution, a country wants to reduce dependence on imports and it focuses on developing domestic industries to meet domestic demand. Therefore, import substitution is closely related to industrialization. Import substitution can only be successful when the domestic industries develop rapidly and sufficiently in order to meet domestic demands. Therefore, import substitution requires structural changes in the economy and realignment of resources.