ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Import-substitution strategies have been justified on a number of grounds. Export pessimism has provided one such rationale. Given the low price and income elasticities of demand for the primary products produced by most less developed nations, export revenue is likely to grow slowly, if at all.

Detailed explanation-2: -Import substitution is a strategy under trade policy that abolishes the import of foreign products and encourages production in the domestic market. The purpose of this policy is to change the economic structure of the country by replacing foreign goods with domestic goods.

Detailed explanation-3: -Understanding Import Substitution Industrialization (ISI) The primary goal of the implemented substitution industrialization theory is to protect, strengthen, and grow local industries using a variety of tactics, including tariffs, import quotas, and subsidized government loans.

Detailed explanation-4: -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?

Detailed explanation-5: -The relationship between the two concepts is that ISI policies are designed to change the comparative advantage of a developing nation. The aim of these policies is to make the country less dependent on imports and to promote domestic industrialization.