Import Substitution :: essays research papers

Import SubstitutionDescribe deduction substitution (Inward looking) developmental st accountgy, clearoutlining the differences between the first and second stage. Assess itseffectiveness in promoting economic development. Compare inward looking andoutward looking strategies and discuss the program line that the latter is superior.The First set up of Import Substitution     All place day industrial and exploitation countries protect theirmanufacturing industries for the domestic markets. While the industrialcountries of today rely primarily upon the usage of relatively low tariffs,developing countries apply high tariffs or quantitative restrictions whicheither limit or completely exclude competition from their imports. Protectionlike that - high certificate - discriminates against exports through theexplicit/implicit tax of the export activities.     Explicit taxation can take the form of export taxes whereas implicittaxation occurs as a result of the effects of protective covering on the commuting rate.As your protection level increases, your exchange rate level will falling off inorder to ensure the necessary equilibrium of the balance of payments and the glare the amount of domestic currency exporters receive per unit of foreignexchange earned.     There is no need for high protection at the first stage of importsubstitution in the replacement of the imports of non-durable consumer goods(clothing, shoes, household goods, textile fabrics, leather, wood and othertypes of inputs) since these commodities exist in the developing countries thatare at the initial frontier of industrialization.     The commodities I mentioned are intensive in un better labor, the scaleof output is relatively low, and costs do not burn up substantially at lower outputlevels. The turnout of the commodities do not involve the use ofsophisticated technology or highly educated workers and sup pliers for parts,components, materials and accessories are not necessary for highly efficientoperations.     An argument for infant industry protection and promotion is made for the"easy" stage, that being the first stage of import substitution because eventhough the domestic return of the commodities generates external economiesin the form of labor training, entrepreneurial development and the stagger oftechnology, there is a viable argument for infant industry protection becausewithout the shielding from larger, more sophisticated companies, these infantindustries will be rugged and overwhelmed by exceeding costs, non-competitiveness due to the lack of highly adroit laborers and the simple factthat these infant industries are technologically incompetent.The Second Stage of Import Substitution     I see the first stage of import substitution as a temporary requirementbecause the domestic production rises since it not only provide s for increasesin consumption but it also replaces imports. The rate of this growth howeverwill decline as soon as the process of import substitution is completed.