Question

THE PROTECTION OF DOMESTIC INDUSTRIES THROUGH IMPORT SUBSTITUTION SUFFERED FROM TWO DRAWBACKS.MENTION THEM.

Answer 1

Dear student,

Import substitution is a policy to promote economic growth by restricting import of goods that compete with domestic products. The objectives of import substitution are:- to create employment, to promote domestic industry, to improve balance of payment etc.

The protection of domestic industries through import substitution suffered from following drawbacks-

1. The domestic industries were not exposed to internationally competitive industries, which made them inefficient.
2. The domestic industries became less innovative, their growth prospects declined.

Regards