A problem associated with import substitution as an industrial policy is:

Question

Quizplus · Accepted Answer

All three options are problems associated with import substitution policy. By protecting industries from foreign competition, import substitution can remove the incentive for industries to be efficient, leading to suboptimal production and high costs. Additionally, industries may be chosen for political reasons rather than economic ones, which can result in inefficient allocation of resources. Finally, import substitution policies often continue long after they were expected to lapse, leading to a lack of innovation and growth in the economy.

A Problem Associated with Import Substitution as an Industrial Policy