Question

The United States, as it began its long and successful growth in the early 19th century, consciously promoted domestic production through such activities as tariffs, Clay's American System, and many direct subsidies to railroads, canal companies, farmers (free land) etc. Today we view this blatant example of large scale and extensive import-substitution industrialization as having been very successful. Comment fully on this statement.

Answer 1

The import substitution policies are the methods used to abolish the import of foreign products and encouraging the domestic industries. The industrial policy was based on the trade policy and practices. The trade policy includes inspection regulations, import and export, tariffs and quotas. This will protect the domestic industry from foreign competition. These import substitution policies focused on the development and the self sufficiency by creating internal market. The state attain economic development through nationalisation, subsidisation, increased tax rates ah also highly protectoral trade policies. Like this kind of trade practices avoid the large scale fall of economy in foreign trade.
The protection of domestic industries and its enhancement in production will improve the total GDP and also increase the level of country’s export. The domestic authority imposes high restriction over the trade as barriers. This will discourage the foreign direct investment. This import substitution policy was successful in large populated countries. Because this enhance the employment opportunities and also improve the living standard of the people. The domestic industry protection improves the development in domestic areas. This enhance the development in the under developed areas in the economy also.