“Import Substitution vs. Export Promotion, What works?”

Author:  Anushka Malkhare, Symbiosis Law School, Pune

Best Citation – Anushka Malkhare, “Import Substitution vs. Export Promotion, What works?” Indian Journal of Legal Review (IJLR), 3 (1) of 2023, Pg. 10-22, ISSN – 2583-2344.

Abstract

The import mechanism renders the growth of more local businesses and facilitates the money to be circulated within the walls of the economy while the export mechanism suggests the manufacturing of products specifically for the international market which increases the exports of the country. Initially the import mechanism was followed but eventually because of extensive government intervention it failed. Further, in light of the failure of the previous approach, the countries started to adopt export strategies to build a better competitive edge over others. But the current scenario in the global economy shows a shift in the strategy and the new trend of being self-reliant is being developed. This new trend suggests the adoption of more import substitution related trade policies. Irrespective of anything, ultimately the final objective of every country is to enhance the industrial and economic performance by adopting either of the mechanisms based on each country’s objectives. In this paper these two opposing strategies are discussed which include import substitution and export promotion. The paper aims to analyze both the mechanisms based on the available data and the case studies and draw out conclusions on what works better. Based on the examples of other countries the paper examines the past trends and draws out a way forward for the world particularly in the after effects of the covid-19 pandemic. The focus of the research paper is on the current scenario and how the world is recovering after the pandemic, it further tries to give suggestions on what path India follow for economic development should.

Keywords – Import substitution, export promotion, trade policy, foreign exchange, international market.