Microeconomic inefficiencies created by ISI policies were aggravated by the tendency of developing country governments to

Question

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ISI policies often involved maintaining overvalued exchange rates, which led to a misallocation of resources and an increase in the cost of imports. This made domestically produced goods relatively cheaper, but also made it more difficult for domestic firms to compete in the international market. It also discouraged exports, which further limited foreign exchange earnings and contributed to a balance of payment crisis.

Microeconomic Inefficiencies Created by ISI Policies Were Aggravated by the Tendency