Import Substitution "Leaky Bucket Model"

 IMPORT SUBSTITUTION

Description also available in video format (attached below)

Definition:- 

• It can be defined as a trade policy which focuses on promotion of economic growth of a nation by restricting Imports that compete with the domestic products.
• It's main approach is to substitute the externally produced goods from locally produced ones. 

Example:-

• Replacing the supply of foreign based manufacturing Cars from Indian based manufacturing Cars and thus contribute to the Indian economy by promoting the small scale industries in our own nation.

✦To understand the "Import Substitution" in a more better way you must have to read out the  "Leaky Bucket" model.

Leaky Bucket Model:-

Consider the following items as:-

• Bucket = India
• Water = Money
• Plugs = Locally produced goods.

✦In the above mentioned picture it can be easily understand that there are many holes present at the surface of the bucket which results in the leakage of water from it and it can only be stopped by using Plugs.

✦ Hence, It can be stated easily on the basis of above statement that we are keep losing money of our nation by allowing the Sales & Import of foreign based manufacturing products in our country and it can only be stopped by replacing the foreign product from our locally manufactured ones.

Objectives of Import Substitution:-

• Promotion & development of Domestic Industries
• To generate employment at local level
• To improve the foreign trade policies

Benefits of Import Substitution:-

• Increase in domestic employment
• Decrease in dependence on labor non intensive industries
• To face out the global economic shock (Recession)
• Decrease the distance of transportation

Video description 

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