Which of the following has not been proposed as a rationale for promoting import substitution?
A) The Prebisch-Singer hypothesis
B) The belief that technological progress occurs mainly in manufacturing
C) The infant industry argument
D) The idea that imports can be a source of TFP growth
E) The fear that reliance on imports makes the economy vulnerable to external forces

Question

Quizplus · Accepted Answer

Import substitution is generally seen as a way to protect emerging industries and promote self-sufficiency in a country's economy. The Prebisch-Singer hypothesis (A) argues that primary commodity exports do not provide the same level of economic growth as manufactured exports. The belief that technological progress occurs mainly in manufacturing (B) suggests that promoting domestic manufacturing will lead to more technological development. The infant industry argument (C) proposes that new industries need protection from foreign competition to become competitive. The fear that reliance on imports makes the economy vulnerable to external forces (E) suggests that import substitution can provide greater stability and security. None of these rationales directly address the idea that imports can be a source of TFP (total factor productivity) growth (D).

Which of the Following Has Not Been Proposed as a Rationale