Demerits of inward-looking industrial development strategy or import substitution industrial development strategy
- It leads to unemployment due to use of capital intensive techniques of production
- Encourage profit repatriation since most factory owners are foreigners
- It promotes monopolistic tendencies as industries are expensive to start
- Leads to wastage of resources due to limited domestic consumer market
- Due to high production costs it leads to cost push inflation
- High protectionism leads to inefficiency of domestic industries and inferior goods and services
- Protectionism is very expensive to implement
- Encourage use of imported inputs such as machinery leading to imported inflation
- Low standards of living due to limited variety
- It leads to rural-urban migration because of localization of industries in urban areas
- import substitution industries concentrate on production of consumer goods instead of capital assets. this limits the rate of investment for the future.
CATEGORIES Economics
TAGS Dr. Bbosa Science
