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Import substitution will harm fiscal policy and economic growth
There is mounting evidence that import substitution curtails economic growth in the long term and holds back progress. Import substitution is an economic policy that advocates replacing imports with local products. A near perfect example was seen in India, where the Licence Raj kept economic growth in India low until the economy was opened up gradually from 1991 by then Finance Minister Manmohan Singh. Today, India is the fastest-growing large economy in the world with growth expected to be over 6% in 2023. Import substitution is typically done using quotas, restrictions and tariffs. But in a globalised world where ... (full story)