Import substitution development strategy

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Import substitution development strategy

A development strategy followed by many Latin American countries and other LDCs that emphasize import substitution-accomplished through protectionism-as the route to economic growth.

Import Substitution Development Strategy

A development strategy whereby a government restricts or forbids the import of industrial material and subsidizes local material. For example, a country may not allow the import of refined oil and instead encourage development of local oil refineries. The idea behind this strategy is to make a less developed country less dependent on international assistance and foreign direct investment until such time as it is can absorb investment more easily and also trade its own products. This development strategy was followed in Latin America and some other regions for most of the mid and late 20th century. It has its theoretical foundations in Keynesian economics, though some analysts have claimed that each nation industrializing after the United Kingdom has followed some form of import substitution.
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The country will reap benefits from STGP as a main shareholder, and will strengthen macroeconomic resilience thanks to currency/FX savings on imports substitution (USD 3 billion) and revenues to the state (USD 1.
He said the most outstanding features of the budget is maintaining sustainable economic growth as well as working towards restoring external sector's balance , containing the factors of price rise, supporting vulnerable segments of the community, supporting the policies of self-sufficiency from the basic commodities, increasing non-petroleum exports and imports substitution.