Question

What were the effects of Import Substitution Industrialization on most countries of Latin America? Discuss 2 benefits to some of the countries.

Answer 1

Import substitution industrialization isa method of increasing exports and becoming self-reliant by promoting doemstic products.This import substitution industrialization has bought positive effect on most countries of Latin America.After adopting this policies,most of the countries achieved the target of decreasing imports by becoming self reliant.Tax rates on goods were revised .Countries started producing consumable goods,food items by themselves and sold them at reasonable prices.DEmand for such goods increased as local citizens started purchasing these domestic products at reasonable prices.Then,countries increased thier capital funds and concentrated on producing tools, machines, vehicles,intermediate goods,etc.To achieve this,modern technology was used in production.Countries accomplished and reached goal of increasing domestic intermediate and technological goods.By these activities,imports were drastically decreased.Since maximum goods were produced domestically to become self-reliant,rate of importing goods decreased.So,in this way most countries in Latin America had positive impact when import subsitution industrialization was implemented.But,still few countries could not achieve the target of becoming self-reliant ,as cost of production was high,scarcity of resources prevailed and even capital funds were insufficient.

Benefits were acquired by some countries.After implemeneting import subsititution industrialization,countries were benefitted.Foriegn companies were owned by such companies and production units were shifted.Another benefit is countries witnessed high gross domestic product rate.Even maximum foriegn direct investment was attained.Sales of domestic products increased and importing of foreign goods was decreased.Hence these are the benefits of some countries.