Import Substitution: Advantages and Disadvantages
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Questions and Answers

What is the main disadvantage of Import Substitution as a development strategy?

  • Lower average marketing cost
  • Dependency on the government for support (correct)
  • Higher quality local products
  • Limited market competition

    • Which argument supports Import Substitution as a development strategy?

  • Higher inflow of foreign currency
  • Lower raw materials cost
  • Higher standard of living (correct)
  • Lower unemployment rate

    • What is the main focus of Export Promotion as a development strategy?

  • Substitute imports with domestic production
  • Leverage comparative advantage in global markets (correct)
  • Promote rapid industrialization through high trade barriers
  • Encourage importation for variety

    • Which argument supports Export Promotion as a development strategy?

    <p>Higher inflow of foreign currency</p> Signup and view all the answers

    What is the Infant Industry Argument in the context of trade policies?

    <p>Protecting new industries from international competition until they become established and competitive</p> Signup and view all the answers

    Which aspect does Import Substitution aim to address?

    <p>Limiting market competition</p> Signup and view all the answers

    What distinguishes the development strategy of Export Promotion from Import Substitution?

    <p>Emphasis on comparative advantage in global markets</p> Signup and view all the answers

    What is a common misconception about Import Substitution as a strategy?

    <p>Emphasis on free trade and foreign competition</p> Signup and view all the answers

    How does Export Promotion contribute to social welfare?

    <p>By improving standard of living through better choices and quality of life</p> Signup and view all the answers

    Which strategy advocates for setting high trade barriers to protect local industries?

    <p>Import Substitution</p> Signup and view all the answers

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