import substitution


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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.

import substitution

a strategy aimed at reducing IMPORTS in order to encourage the production of domestic substitutes. Import substitution is pursued in particular by DEVELOPING COUNTRIES as a means of promoting domestic INDUSTRIALIZATION and conserving scarce FOREIGN CURRENCY resources. By limiting or removing competing IMPORTS through the use of QUOTAS, TARIFFS, etc., the country aims to establish its own manufacturing industries which, initially, can be expanded to cater for the domestic market, and at a later stage develop an EXPORT trade. See INFANT INDUSTRY, ECONOMIC DEVELOPMENT.
References in periodicals archive ?
The investment project was implemented by LLC Kurskkhimvolokno within the framework of the plan of measures for import substitution in the chemical industry.
New steel projects expected to come on stream in the next 12 months will save the national exchequer billions of dollars in import substitution.
Yet an important distinction exists between how import substitution is practiced in cities and how it was adopted on a national scale.
There are export and import substitution opportunities, but structural problems caused by past neglect and lack of resolve will limit the country's ability to fully respond.
The sources said the Ministry is of considered opinion that it is high time to lure giant global manufacturers to relocate manufacturing facilities in Pakistan with special focus on import substitution as well as export enhancement.
It could therefore become part of Abuja's much wider import substitution strategy, which has seen the Central Bank of Nigeria refuse to provide hard currency to cover many basic imports.
European Union, Canada and a number of other countries the Russian government has declared the strategy of import substitution as the main driver for economy development for the next several years.
There is a desperate need to promote import substitution industries to Pakistan in order to save valuable foreign exchange, said member of National Committee on Small and Medium Enterprises (NCSME) Zulfikar Thaver.
Import substitution helps create a self-sufficient economy and decreases "leakages" that occur when paying for imported goods.
He said: "The development of indigenous gas resources will deliver significant and sustained benefits, particularly in terms of enhanced security of supply, import substitution, national and local economic development and fiscal return.
The official highlighted that Cuba will allocate its resources toward import substitution and export in 2016, mentioning a 2016 investment plan of over 7 million U.
Maintaining economic stability, achieving a sustainable growth, reducing budget deficit and trade deficit by increasing exports and resorting to import substitution, are among the objectives for next year's budget.