Which of the following is one of the three main disadvantages of an import-substitution industrialization strategy?
A)It may be very difficult for developing nations to set up export industries because of the competition from the more established and efficient industries in developed nations
B)Domestic industries can grow accustomed to protection from foreign competition and have no incentive to become more efficient
C)Developed nations often provide a high level of effective protection for their industries producing simple labor-intensive commodities in which developing nations already have or can soon acquire a comparative advantage
D)Foreign firms are induced to establish so-called tariff factories to overcome the tariff wall of developing nations.

Question

Quizplus · Accepted Answer

One of the main disadvantages of an import-substitution industrialization strategy is that it can create domestic industries that become reliant on protectionism and have no incentive to become more efficient. This can lead to a lack of competitiveness in the global market and hinder overall economic growth. The other answer choices describe different disadvantages of this strategy, but B best fits the description of a main disadvantage.

Which of the Following Is One of the Three Main