What is a problem associated with import substitution as an industrial policy?
A) It removes the incentive for industries to be efficient.
B) Industries are often chosen for political, and not economic, reasons.
C) It often stays in place long after it was expected to lapse.
D) All of these are problems associated with import substitution.

Question

Quizplus · Accepted Answer

All of these are problems associated with import substitution. Import substitution can lead to inefficiencies in industries as they do not have to compete with international markets, industries may be chosen for political reasons rather than economic reasons, and the policy may continue for longer than intended, which can lead to a lack of innovation and growth in the economy.

What Is a Problem Associated with Import Substitution as an Industrial