13 Arguments (Merits) for import substitution industrialization strategy
- It facilitates the exploitation and utilization of the idle local resources. This is because import substituting industries mainly use local raw materials. This helps to improve on the productive capacities in the economy hence economic growth and development.
- It widens the tax base of the country. Import substituting industries widen the tax base in form of employment opportunities created and various investments undertaken hence generating more tax revenue to the government. The revenue realized is used to construct social and economic infrastructure like hospitals, roads, schools, power plants, roads etc.
- It improves the standards of living. The strategy leads to the production of a variety of high quality goods and services in the economy. This widens the choice of consumers at reduced prices hence better standards of living in the long run.
- It facilitates technological progress in the country. The strategy encourages the use of modem production techniques through research, inventions, innovations and technology transfer. This increases efficiency hence production of better quality goods and services.
- It improves the balance of payment position of the country. The strategy encourages local production of high quality goods and services which were formally imported. This reduces expenditure on imports hence improved balance of payment position.
- It saves the scarce foreign exchange earnings of the country. The strategy encourages the production of formerly imported goods locally. This reduces foreign exchange outflow hence accumulating foreign exchange reserves.
- It increases employment opportunities. This is due to increased resource utilization and a number of production and other economic activities carried out. This is true if labour intensive techniques of production are employed. This increases the income of the people.
- It leads to the development of social and economic infrastructure. The strategy promotes the development of the social and economic infrastructures in form of roads, schools, hospitals, financial institutions etc. required for import substituting industries.
- It promotes self-sufficiency and reliance of the economy. The strategy encourages the production of a number of formally imported goods and services locally. This leads to increased self-reliance and sustenance of the economy hence reducing of foreign dependence.
- It promotes inter sectoral linkages in the economy especially with the agricultural sector. This is because the import substituting agro based industries provide factor inputs to the agricultural sector and market for the products from the agricultural sector in form of raw materials.
- It increases capital inflow in the country. The strategy attracts foreign investors who bring in capital and efficient technology. This increases capital inflow and foreign skills in the country.
- It increases the GDP of the country. The strategy promotes the establishment of manufacturing industries which leads to the production of more goods and services hence high levels of national income and economic growth.
- It facilitates the development of skills for local entrepreneurs. This promotes managerial capacity building through on job training and helps to reduce government expenditure on training costs.
CATEGORIES Economics
TAGS Dr. Bbosa Science
