Impact / advantages and disadvantages /merits and demerits of import substitution development strategy in Uganda

Positive impacts/advantages/merits of import substitution strategy

• increased output hence economic growth
• lead to infrastructural development
• improves labour skills
• improved balance of payment position/save foreign exchange
• provide revenue to government
• increased utilization of local resources
• reduced imported inflation
• reduced dependence on imports
• provide employment opportunities
• encourage capital inflow/foreign investment
• diversify the economy
• promote growth of industrial sector
• creates linkages with other sectors/widen market

Negative impacts/disadvantages/demerits of import substitution strategy

• production of low quality output
• lead to technological unemployment
• limited variety of good hence limited choice
• imbalance  in regional development
• rural urban migration because most industries are concentrated in urban areas
• high government expenditure of subsidization
• loss of government revenue from import duties
• depletion of resources/over utilization of resources
• capital outflow through profit repatriation
• promotes external resource dependence
• environmental pollution