Import substitution politics one calls beginnings of development policy, which aim at the replacement of imported goods by national production. This happens usually in form of an appropriate industrialization.

Expectations to the import substitution

Since many developing countries have an import structure coined/shaped by industrial goods, an important aspect of import substitution is in fact often the industrialization, which particularly of countries of the asiatic area in the center 20. Century one practiced. As advantage of such a policy the fact that the sales markets do not only have to be developed, was regarded. Above all growth-political, occupation-political and balance of payments-political effects were expected. In detail this secondary growth impulse is, foreign exchange savings v.a. by replacement of consumer goods imported goods and expansion of the occupation in the new industries.

Instruments of the import substitution

Representatives essentially require protectionism of development policy of import substitution politics.

In agrarian coined/shaped societies with high covered unemployment the border product of the factor of production work is the usually substantially under actually paid average wage. That has the consequence that in the industries increased nominal wages would have to be paid, in order to arrange these attractive for employees. Since these are not competitive at the world market, justify this protectionist protective duties, in order to implement over increased home-market prices for the expansion of these sectors necessary lower real wages.

Protective duties appear also suitably around direct investments and production misalignments of foreign investors to energize.

Temporary Protektion (educating tariffs) is also of emergencies, in order to promote in young local industries learning and growth processes and to thus make a growing possible into optimal sizes of company (scale yields).

Problem of the import substitution

Long-term investigations showed however that import substitutions from perspective of development policy are not successful. Import restrictions in the consumer and industrial goods range cause prices superelevated here first, what can lead to an oversizing of the appropriate production sector in the development country. This can lead to an economical Fehlallokation and obstruct the entire export range.

A further problem is the small size of many developing national economies, which makes a durable increasing of the domestic markets improbable.

Also the goal of the structure of a capital-intensively producing "“modern"” sector leads to high additional imported goods at capital goods (and raw and intermediate goods), which continues to intensify import dependence. At least initial domestic market orientation obtains no, causes however further foreign exchange expenditures. This intensifies again the balance of payments problem.

See also: Dualism theories

Articles in category "Import substitution politics"

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