Recent trends in developing countries

Import substitution is not a clear-cut analytical concept; in fact its definition and measurement are determined partly by the economic structures and conditions under study and partly by the purpose or purposes for which the measurement is needed. In an economy with constant population, constant incomes and unchanging demand patterns, an increase in domestic production will lead to a decrease in imports. In such a case, import substitution is easily recognized and simply measured. But in the developing ECAFE countries where the population is increasing rapidly and governments are pursuing development programmes which change the distribution of income and the character of demand, a wider concept of import substitution is needed. For example, where domestic production of a certain commodity increases but the amount of increase falls short of the growth in domestic demand for that commodity, imports will continue to rise, although at a slower rate. Only when the absolute amount of domestic production increases faster than consumption will imports show an absolute decline.

Sustainable Development Goals:

Decent Work and Economic Growth

Reduced Inequalities