One of the reasons that import substitution is popular is that
A)there was never any demand for the products in question
B)infant industries would have to compete against global rivals
C)it benefits suppliers to the favored domestic industries
D)it slows down the progression through the production chain
E)the emphasis is on comparative advantage and trade expansion

Question

Quizplus · Accepted Answer

Import substitution policies benefit suppliers to the favored domestic industries, as they are protected from foreign competition and can thus sell their products at higher prices. This protectionism can lead to inefficiencies and a lack of competitiveness in the long run, but it can be politically popular in the short term as it supports domestic businesses and jobs. Option A is not correct because there may have been demand for the foreign products, but import substitution policies seek to replace them with domestic alternatives. Option B is a potential argument against import substitution, but it is not a reason why it is popular. Option D is also incorrect because import substitution policies typically involve trying to build up domestic production chains, not slowing them down. Option E is the opposite of import substitution, which seeks to reduce trade and emphasize domestic production.

One of the Reasons That Import Substitution Is Popular Is