Which of the following is required for a country to successfully pursue an import-substitution strategy?
A) Imposition of protective tariffs
B) Policies to encourage foreign investment in order to facilitate rapid technology transfer
C) A flexible exchange rate system
D) A liberal immigration policy to increase the size of the labor force

Question

Quizplus · Accepted Answer

Imposition of protective tariffs is necessary for an import-substitution strategy as it increases the prices of foreign goods, making domestically produced goods more competitive. This encourages consumers to purchase domestically produced goods rather than imported ones, ultimately leading to an increase in domestic production and self-sufficiency. Policies to encourage foreign investment, a flexible exchange rate system, and a liberal immigration policy may aid in economic development, but they are not essential components of an import-substitution strategy.

Which of the Following Is Required for a Country to Successfully