Import substitution does not allow a country to develop a spiral of cumulative causation.

Question

Quizplus · Accepted Answer

Import substitution policies focus on promoting domestic production and reducing reliance on foreign imports. While this may boost the domestic economy in the short term, over-reliance on import substitution can lead to a narrow and inefficient industrial base, as well as potential trade barriers and reduced competition. This can create a spiral of cumulative causation, where the lack of competitiveness and limited technological progress leads to continued economic stagnation or even decline.

Import Substitution Does Not Allow a Country to Develop a Spiral